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7, 2022
Through the Fuel Agreement and Amazon Warrant, our board of directors (the “Board”) believes Amazon can become an important strategic partner for Clean Energy. Further, Amazon is purchasing low and negative carbon Renewable Natural Gas (“RNG”) from Clean Energy, which we believe validates using RNG as a transportation fuel at scale.
achieve their sustainability goals by significantly reducing greenhouse gas emissions produced by their fleets.
The Warrant Shares vest in multiple tranches,Los Angeles.
We believe a commercial partnership with Amazon will enhance our strategies, initiatives and efforts to achieve our goals to grow fleet and other consumer support for the use of RNG as a vehicle fuel for our target customers and geographies. The Board also believes the proceeds from the issuanceissue of our common stock to Amazon in the event Amazon were to vest and then exercise the Amazon Warrant in part or whole for cash, would enhance our liquidity in support of our operations, as well as our ability to execute our business plans and pursue opportunities for further growth. Accordingly, we believe securing this commercial partnership and incenting Amazon to purchase the maximum amount of fuel under the Fuel Agreement is important for the trajectory of Clean Energy.
Our Board approved the Fuel Agreement and Amazon Warrant, and recommends our stockholders approve the Amazon Warrant as described in these proxy materials. Further, all independent Board members and senior executive officers (including myself) have agreed to vote our shares in favor of the transaction.
changing climate with RNG.
The accompanying notice of Annual Meeting and proxy statement include the agenda for the Annual Meeting, explain the matters that will be discussed and voted on at the Annual Meeting and provide certain other information about our Company.
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(212) 929-5500 or
Call Toll Free (800) 322-2885
Email: proxy@mackenziepartners.com
PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION
June 14, 2021
| | | | By order of the Board of Directors, | |
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Dated: April | | | MITCHELL W. PRATT Corporate Secretary | |
2021
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2021
Use of the Internet
Voting Requirements
The approval of an amendment to our Restated Certificate of Incorporation to increase the authorized shares of our common stock (Proposal 5) must be approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock entitled to vote on the proposal at the Annual Meeting. Abstentions will have the same effect as a vote against Proposal 5. Because Proposal 5 is expected to be a “routine” matter for which you shares may be voted in the discretion of your broker if voting instructions have not been received, we do not expect any broker non-votes to occur on Proposal 5.
Proposal | | | Vote Required | | | Routine vs. Matter | | | Effect of Abstentions and Broker Non-Votes | |
1: Election of Directors | | | Plurality of Votes Cast | | | Non-Routine | | | No effect | |
2: Ratification of Independent Registered Public Accounting Firm | | | Majority of Votes Cast | | | Routine | | | Abstentions: No effect Broker non-votes: None expected | |
3: Advisory, Non-Binding Vote on Executive Compensation | |
| ||||||||
| Majority of Votes Cast | | | Non-Routine | | | No effect | | ||
4: Approval of our | | | Majority of | | Non-Routine |
| | No effect | |
Voting Results
Beneficial Owners of Shares Held in Street Name
We will bear all costs related to this solicitation, including the costs of preparing, printing, assembling, mailing or otherwise furnishing our proxy materials to our stockholders, reimbursement of persons representing beneficial owners for their costs of forwarding such proxy materials to the beneficial owners, and the fees and expenses of MacKenzie in connection with its proxy solicitation services for the Annual Meeting. Pursuant to our arrangement with MacKenzie, we have agreed to pay MacKenzie for these services a base fee of $25,000, plus additional per-service fees for specified services if needed or requested and reimbursement of MacKenzie’s reasonable out-of-pocket expenses.
Separate Copy of Annual Report or Other Proxy Materials
Common | Percent of | |||||||
Stock | Common | |||||||
Beneficially | Stock | |||||||
Name and Address of Beneficial Owner | Owned | Outstanding | ||||||
TOTAL(1) | 58,754,347 | 29.4 | % | |||||
2, place Jean Millier | ||||||||
La Défense 6 | ||||||||
92400 Courbevoie | ||||||||
France | ||||||||
Dimensional Fund Advisors LP(2) | 11,013,905 | 5.5 | % | |||||
Building One | ||||||||
6300 Bee Cave Road | ||||||||
Austin, Texas 78746 |
Name and Address of Beneficial Owner | | | Common Stock Beneficially Owned | | | Percent of Common Stock Outstanding | | ||||||
TotalEnergies/TMS(1) 2, place Jean Millier La Défense 6 92400 Courbevoie France | | | | | 50,711,605 | | | | | | 22.8% | | |
BlackRock, Inc.(2) 55 East 52nd Street New York, New York 10055 | | | | | 14,149,739 | | | | | | 6.4% | | |
Grantham, Mayo, Van Otterloo & Co. LLC(3) 40 Rowes Wharf Boston, Massachusetts 02110 | | | | | 12,357,746 | | | | | | 5.5% | | |
Common Stock | ||||||||
Beneficially Owned | ||||||||
Name of Beneficial Owner | Number | % | ||||||
Andrew J. Littlefair(1) | 2,351,013 | 1.2 | % | |||||
Robert M. Vreeland(2) | 782,811 | * | ||||||
Mitchell W. Pratt(3) | 1,056,134 | * | ||||||
Barclay F. Corbus(4) | 1,035,739 | * | ||||||
Lizabeth Ardisana(5) | 52,000 | * | ||||||
Philippe Charleux | — | — | ||||||
Thomas Maurisse | — | — | ||||||
James C. Miller III (6) | 340,501 | * | ||||||
Stephen A. Scully(7) | 363,618 | * | ||||||
Kenneth M. Socha(8) | 399,258 | * | ||||||
Vincent C. Taormina(9) | 496,518 | * | ||||||
Parker Weil(10) | 42,000 | * | ||||||
All current executive officers and directors as a group (12 persons)(11) | 6,919,592 | 3.4 | % |
Name of Beneficial Owner | | | Common Stock Beneficially Owned | | |||||||||
| Number | | | % | | ||||||||
Andrew J. Littlefair(1) | | | | | 2,561,156 | | | | | | 1.1% | | |
Robert M. Vreeland(2) | | | | | 727,189 | | | | | | * | | |
Mitchell W. Pratt(3) | | | | | 1,171,595 | | | | | | * | | |
Barclay F. Corbus(4) | | | | | 1,151,200 | | | | | | * | | |
Lizabeth Ardisana(5) | | | | | 127,000 | | | | | | * | | |
Karine Boissy-Rousseau | | | | | — | | | | | | — | | |
James C. Miller III(6) | | | | | 390,501 | | | | | | * | | |
Lorraine Paskett | | | | | — | | | | | | — | | |
Stephen A. Scully(7) | | | | | 438,618 | | | | | | * | | |
Kenneth M. Socha(8) | | | | | 449,258 | | | | | | * | | |
Vincent C. Taormina(9) | | | | | 546,518 | | | | | | * | | |
Parker Weil(10) | | | | | 117,000 | | | | | | * | | |
Laurent Wolffsheim | | | | | — | | | | | | — | | |
All current executive officers and directors as a group (13 persons)(11) | | | | | 7,680,035 | | | | | | 3.4% | | |
(7)
March 22, 2022.
10
The Nasdaq Stock Market LLC (“Nasdaq”).
Name of Director Nominee | | Age | | | Position(s) and Office(s) | | |
Andrew J. Littlefair | | 61 | | | President, Chief Executive Officer and Director | | |
Stephen A. Scully | | 62 | | | Chairman of the Board | | |
Lizabeth Ardisana | | 70 | | | Director | | |
| 48 | | | Director | |||
James C. Miller III | | 79 | | | Director | | |
Lorraine Paskett | | | 54 | | | Director | |
Kenneth M. Socha | | 75 | | | Director | | |
Vincent C. Taormina | | 66 | | | Director | | |
Parker A. Weil | | 56 | | | Director | | |
Laurent Wolffsheim | | | 50 | | | Director | |
Ms. Ardisana brings to our Board key experience and relationships in the automotive and environmental industries, as well as skills acquired through serving as a chief executive officer and as a member of multiple public and private company boards.
Ecole Nationale des Industries Chimiques, Nancy and also a Master’s degree in Marketing and Management from Conservatoire National des Arts et Métiers, Paris.
Mr. MaurisseLaw. was appointed as a director pursuant to director designation rights granted to TMS in June 2018, in a transaction described under “Certain Relationships and Related Party Transactions” below. He
Kenneth M. Socha has served as a director of our Company since January 2003. From 1995 until his retirement at the end of 2014, Mr. Socha served as a Senior Managing Director of Perseus, L.L.C., a private equity fund management company. Previously, Mr. Socha practiced corporate and securities law as a partner in the New York office of Dewey Ballantine. Mr. Socha earned an A.B. from the University of Notre Dame and a J.D. from Duke University Law School.
Minimum Criteria
Board Refreshment
our Board members is eight (8) years.
| Senior Leadership Experience: | | | Board members who have served in senior leadership positions, such as a chief executive officer, chairman, senior executive, or leader of significant operations, are important to us because they have the experience and perspective to analyze, shape and oversee the execution of important strategic, operational and policy issues. These Board | |
| RNG and Conventional Natural Gas and Industry Experience: | | | Because we are seeking to drive adoption of RNG and conventional natural gas as a vehicle fuel by fleet vehicle operators, primarily in the trucking, airport, refuse, public transit, industrial and institutional energy user and government fleet markets, relevant education or experience in our industry is key for understanding our markets, strategy, risk management and operations. | |
| Government, Legal, Public Policy and Regulatory Expertise: | | | Board members who have served in government positions provide experience and insights that help us work constructively with governments and address significant public policy issues. Board members with a background in law can assist the Board and legal team in fulfilling its oversight responsibilities regarding our legal and regulatory compliance and our engagement with regulatory authorities. | |
| Financial Expertise: | | | Knowledge of financial markets, financing and funding operations and accounting and financial disclosure and reporting processes is important to have well-represented on our Board. This experience helps our Board members in understanding and overseeing our capital structure, financing and investing activities, as well as our financial reporting and internal controls. | |
| Public and Private Company Board Experience: | | | Board members with public and private company board experience understand the dynamics and operations of a corporate board. These matters include the relationship of a company board with senior management personnel, the legal and regulatory landscape in which companies must operate, the importance of particular agenda and oversight issues, and how to oversee an ever-changing mix of strategic, operational and compliance-related matters. | |
Director | | Senior Leadership Experience | | | RNG and Natural Gas and Industry Experience | | | Government, Legal and Regulatory Expertise | | Financial Expertise | | Company Board Experience | | ||||||||||||||||||
Andrew J. Littlefair | | | √ | | | | √ | | | | | | √ | | | | | | | | | | | | √ | | | ||||
Stephen A. Scully | | | √ | | | | √ | | | | | | | | | | | | √ | | | | | | √ | | | ||||
Lizabeth Ardisana | | | √ | | | √ | | | | | | √ | | | | | | √ | | | | | | √ | | | |||||
| | √ | | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | √ | | | |||||||||||||||
James C. Miller III | | | √ | | | √ | | | | | | √ | | | | | | √ | | | | | | √ | | | |||||
Lorraine Paskett | | | | | √ | | | | | | √ | | | | | | √ | | | | | | | | | | | | √ | | |
Kenneth M. Socha | | | √ | | | | √ | | | | | | √ | | | | | | | | | | | | √ | | | ||||
Vincent C. Taormina | | | √ | | | | | | √ | | | | | | | | | | | | | | | | | | | | | ||
Parker A. Weil | | | √ | | | √ | | | | | | √ | | | | | | √ | | | | | | √ | | | |||||
Laurent Wolffsheim | | | | | √ | | | | | | √ | | | | | | | | | | | | √ | | | | | | √ | | |
Year Ended December 31, | ||||||||
2019 | 2020 | |||||||
($) | ($) | |||||||
Audit Fees(1) | 1,268,450 | 1,278,000 | ||||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total | 1,268,450 | 1,278,000 |
| | | Year Ended December 31, | | |||||||||
| 2020 ($) | | | 2021 ($) | | ||||||||
Audit Fees(1) | | | | | 1,278,000 | | | | | | 1,588,076 | | |
Audit-Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | — | | | | | | — | | |
Total | | | | | 1,278,000 | | | | | | 1,588,076 | | |
19
OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT
PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC
20
Background
On April 16, 2021, in connection with executionPURCHASE PLAN
Our Board recommends that ourevent of a stock split, stock dividend, combination or reclassification or similar event. If stockholders approve our issuancethe New ESPP, the Old ESPP will terminate following the conclusion of the currently in-progress offering period on June 30, 2022, and the shares available under the Old ESPP will no longer be available for option awards under either the Old ESPP or the New ESPP (
The Amazon Warrant and Related Agreements
The Warrant Shares vest in multiple tranches, the first of which for 13,283,445 Warrant Shares vested upon executionfair market value per share of the Fuel Agreement. Subsequent tranches can vest over time based on discretionary fuel purchases or other spending by Amazon and its affiliates, up to a total of $500 million. Subject to vesting and certain other conditions, the Amazon Warrant may be exercised, in whole or in part, at any time before April 16, 2031 at an exercise price of $13.49 per share, which was determined based on the 30-day volume-weighted average price of our common stock as of April 15, 2021, and is 21.3% more than the $11.12 closing price of our common stock on April 15, 2021, the last day prior to our issuance of the Amazon Warrant.
offering period.
Anti-Dilution Adjustments and Other Rights
Both the exercise price and the number of Warrant Shares subject to purchase under the Amazon Warrant are subject to customary anti-dilution adjustments, including as a result of any dividend or distribution of additional shares of our common stock or stock split, subdivision, combination or reclassification involving our common stock. Subject to certain exceptions, the exercise price and number of Warrant Shares issuable upon exercise of the Amazon Warrant are also subject to adjustment in connection with certain repurchases by us of our outstanding common stock. Further, in the event we issue, or commit to issue, any equity securities in a financing to raise capital within six months after the issuance of the Amazon Warrant, the number of Warrant Shares subject to the Amazon Warrant will be increased to a number that would represent 19.999% of our outstanding common stock on a fully diluted basis aftergiven date is the closing sales price of the common stock on the Nasdaq Global Select Market as of such date. As of March 15, 2022, the fair market value of a share of the Company’s common stock as reported on the Nasdaq Stock Market was $7.17.
the end of that period and his or her accumulated payroll for the offering period in which withdrawal occurs shall be refunded.
Stockholder Approval Requirement
UnderCompany or a change in the termscomposition of a majority of the Transaction Agreement, we are requiredBoard following a contested election (each, a “Corporate Transaction”) during an offering period, all outstanding purchase rights shall be assumed by the successor corporation (or a parent or subsidiary thereof), unless the Plan Administrator determines, in its sole discretion, to use our commercially reasonable effortsshorten the offering period then in-effect to obtaina new purchase date. If the approval of our stockholders with respectPlan Administrator shortens the offering period then in progress to a new purchase date, the Plan Administrator will provide notice to each participant that (i) his or her purchase right will be automatically exercised on the new purchase date or (ii) the Company will pay to him or her, on the new purchase date, cash, cash equivalents, or property as determined by the Plan Administrator that is equal to the issuancedifference in the fair market value of the shares of our common stock covered by his or her purchase right and the purchase price due had the purchase right been automatically exercised on the new purchase date.
Support Agreements
In connection with the requirement for Stockholder Approval and pursuant to the terms of the Transaction Agreement, we have entered into Support Agreements by and among us, Amazon and each of our executive officers, members of our board of directors who are independent directors within the meaning of applicable rules of Nasdaq and the T. Boone Pickens Trust, under which each such stockholder has irrevocably agreed, among other things, to vote the number of shares of our common stock beneficially owned by such stockholder and for which he, she or it has or shares voting power in favor of the Stockholder Approval. Each stockholder’s agreements pursuant to the Support Agreement will continue until either the Stockholder Approval is obtained or the term of the Amazon Warrant expires. As of April 19, 2021, the record date for the Annual Meeting, an aggregate of 11,169,592 shares of our common stock, representing 5.6% of the outstanding shares of our common stock as of such date, were owned or controlled by our independent directors, executive officers and the T. Boone Pickens Trust and are subject to the Support Agreements.
Beneficial Ownership Limitation
Under the terms of the Amazon Warrant, Amazon.com NV Investment Holdings LLC (“Amazon Holdings”) as the holder of the Amazon Warrant may not exercise the Amazon Warrant to the extent such exercise would cause Amazon Holdings to beneficially own more than 4.999% of the number of shares of our common stock immediately outstanding after giving effect to such exercise (excluding any unvested portion of the Amazon Warrant) (the “Beneficial Ownership Limitation”). Amazon Holdings may, however, waive or modify the Beneficial Ownership Limitation by providing us written notice sixty-one (61) days before such waiver or modification becomes effective (or immediately upon written notice to us to the extent we are subject to certain acquisition transactions pursuant to a tender or exchange offer).
Registration Rights
Under the Transaction Agreement, we also granted Amazon customary registration rights with respect to the Amazon Warrant and the Warrant Shares, including (i) the right to demand registration of the sale of the Amazon Warrant and the Warrant Shares under the Securities Act, (ii) piggyback registration rights to include the Warrant Shares as part of any registration of shares of our common stock under the Securities Act (except for a registration on Forms S-4 or S-8 and certain other limitations set forth in the Transaction Agreement), and (iii) the right to require us to register the Amazon Warrant and the Warrant Shares on a Form S-3 shelf registration statement to allow for the offering of the Amazon Warrant and the Warrant Shares for sale on a continuous basis pursuant to Rule 415 under the Securities Act. Our requirement to register the sale of the Amazon Warrant and the Warrant Shares as provided under clauses (i) through (iii) is, in each case, subject to the terms and conditions set forth in the Transaction Agreement, including our payment of specified fees and expenses related to such registration. The registration rights under the Transaction Agreement will continue until the date on which the Amazon Warrant and all Warrant Shares have been disposed of by Amazon Holdings or any subsidiary of Amazon holding such securities.
Transfer and Standstill Restrictions
The Transaction Agreement also limits Amazon’s ability to transfer the Amazon Warrant to certain unaffiliated third parties and imposes customary standstill limitations on Amazon if, and so long as, Amazon and its subsidiaries beneficially own at least 5% of our outstanding common stock.
Governance Rights
The Transaction Agreement does not provide Amazon with the right to designate any individuals to serve as directors on our Board or, except as described herein, any rights and privileges beyond the rights and privileges associated with the common stock held by our existing stockholders.
Reasons for Requesting Stockholder Approval
Our common stock is listed on Nasdaq, and as a result, we are subject to Nasdaq’s Listing Rules, including Nasdaq Listing Rule 5635(b). Nasdaq Listing Rule 5635(b) requires stockholder approval prior to an issuance of securities that will result in a “change of control” of a listed company, which for Nasdaq purposes is generally deemed to occur when, as a result of an issuance, an investor or a group of investors acquires, or has the right to acquire, 20% or more of the outstanding shares of common stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or voting powerother change in corporate structure effected without the Company’s receipt of consideration, appropriate adjustments will be made to (i) the maximum number of securities issuable under the New ESPP, including the maximum number of securities issuable per participant on any one purchase date and (ii) the number of securities subject to each outstanding purchase right and the purchase price payable per share thereunder.
Accordingly, we are seeking stockholder approval pursuant to Nasdaq Listing Rule 5635(b) to permit the issuance of Warrant Sharesprice in excess of the Share Cap (which is highest numberpurchase price paid for the shares, the gain on the sale of the shares will be taxed as ordinary income to the participant to the extent of the lesser of (1) the amount by which the fair market value of the shares on the grant date of the offering period in which the participant acquired the shares exceeded the purchase price of the shares, or (2) the gain on the sale of the shares. Any portion of the participant’s gain on the sale of the shares not taxed as ordinary income will be taxed as long-term capital gain. If the participant holds the shares for the Required Holding Period and then sells the shares at a price less than the purchase price paid for the shares, the loss on the sale will be treated as a long-term capital loss to the participant. The Company will not be entitled to a tax deduction with respect to any shares held by the participant for the Required Holding Period, regardless of whether the shares are eventually sold at a gain or a loss.
Reasons for the Transactions with Amazon
Our Board determined, in its business judgment, that the transactions with Amazon as described above, including the issuance of the Amazon Warrant, and the possible future purchase by Amazon Holdings of the Warrant Shares issuable thereunder, are in the best interests of the Company and our stockholders. Our Board approved these transactions, subject to any required stockholder approval, and recommends that our stockholders vote in favor of this Proposal 4. In making this determination and approval, the Board considered, among other things, the factors and characteristics of the transactions described below.
New ESPP.
The Warrant Shares vest in multiple tranches, the first of which for 13,283,445 Warrant Shares vested upon execution of the Fuel Agreement. Subsequent tranches will vest over time based on fuel purchases by Amazon and its affiliates, up to a total of $500 million, excluding any payments attributable to “Pass Through Costs,” which consist all costs associated with the delivered cost of gas and applicable taxes determined by reference to the selling price, gallons or gas sold. Importantly, if all the vesting conditions of the Amazon Warrant are satisfied, Amazon will have purchased hundreds of millions of GGEs of RNG at today’s fuel prices from Clean Energy.
We believe a commercial partnership with Amazon will enhance our strategies, initiatives and efforts to achieve our goals to grow fleet and other consumer support for the use of RNG as a vehicle fuel for our target customers and geographies, and other contributions and factors. The Board also believes the proceeds from the issuance of our common stock to Amazon in the event Amazon were to vest and then exercise the Amazon Warrant in part or whole for cash, would enhance our liquidity in support of our operations, as well as our ability to execute our business plans and pursue opportunities for further growth.
Possible Effects if Proposal 4 Is Approved
If this Proposal 4 is approved by our stockholders, then, subject to the satisfaction of the vesting and other conditions set forth in the Amazon Warrant, including as described herein, we would be able to issue to Amazon 2,546,224 shares (the “Additional Warrant Shares”) more than if our stockholders do not approve this proposal, subject to any future anti-dilution and other adjustments. If Amazon were to vest and exercise for cash the entire 53,141,755 shares under the Amazon Warrant, the 2,546,224 of Additional Warrant Shares subject to stockholder approval would represent approximately 1% of our outstanding common stock as of the date of this proxy statement.
The rights and privileges associated with all shares of our common stock issuable under the Amazon Warrant are identical to those associated with our existing common stock, and will not include preemptive, conversion or other rights to subscribe for additional shares of our common stock.
Approval of this Proposal 4, assuming the satisfaction of the vesting and other conditions set forth in the Warrant Agreement and our issuance of the shares issuable thereunder, could have the following effects:
Possible Effects if Proposal 4 Is Not Approved
If this Proposal 4 is not approved by our stockholders, then, pursuant to the Amazon Warrant, the issuance of shares of our common stock exceeding the Share Cap upon exercise of the Amazon Warrant may be restricted by the Nasdaq Listing Rule 5635(b). In such event, however, Amazon would have the right to require us to cause an additional meeting of stockholders to be held every twelve (12) months thereafter until either the Stockholder Approval is obtained or the term of the Amazon Warrant expires. Accordingly, if our stockholders do not approve this Proposal 4, we anticipate that we would seek the Stockholder Approval again at or before our next annual meeting of stockholders and at one or more future meetings of our stockholders thereafter until the Stockholder Approval is obtained or the term of the Amazon Warrant expires.
If we fail to obtain the Stockholder Approval, we would adversely impact the opportunity to obtain the maximum interest of Amazon. Our Board believes the potential value and benefits of our relationship with Amazon then could be materially weakened. As discussed above, we believe our potential transactions with Amazon could prove to be important in the trajectory of Clean Energy, and a failure to obtain the Stockholder Approval could deprive us of some or all of the benefits we anticipate from these potential transactions and relationships.
Securities Law Matters
This Proposal 4, together with the other disclosures contained in this Proxy Statement, is neither an offer to sell nor a solicitation of an offer to buy any of our securities.
The Amazon Warrant and the Warrant Shares have not been registered under the Securities Act or under any state securities law and were offered and issued, as applicable, in reliance upon the exemption from registration requirements of the Securities Act set forth in Section 4(a)(2) of the Securities Act. Clean Energy did not engage in a general solicitation or advertising regarding the issuance of the Amazon Warrant. Amazon has represented to Clean Energy its intention to acquire the Amazon Warrant and Warrant Shares for investment purposes only and not with a view toward their resale, distribution or other disposition in violation of the Securities Act or any applicable state securities laws, and appropriate legends will be affixed to the Amazon Warrant and the Warrant Shares.
No Appraisal Rights
Under applicable Delaware law, our stockholders are not entitled to appraisal rights with respect to the proposed issuance and sale of our common stock to Amazon Holdings upon exercise of the Amazon Warrant.
Required Vote and Effect of Not Casting Your Vote
Proposal 4 must be approved by the affirmative vote of a majority of the votes cast on the proposal by shares of our common stock present or represented by proxy at the Annual Meeting. We expect that Proposal 4 will constitute a “non-routine” matter on which a broker, bank or other nominee is not entitled to vote shares held on behalf of a beneficial owner without receiving voting instructions from the beneficial owner. Consequently, if you hold your shares in street name (such as through a brokerage account) and you do not instruct your broker, bank or other nominee on how to vote on this Proposal 4, a “broker non-vote” will occur with respect to Proposal 4. Abstentions, if any, and broker non-votes with respect to Proposal 4 are not treated as votes cast and will not be counted in determining the outcome of Proposal 4.
OUR BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF
THE ISSUANCE OF THE WARRANT SHARES UPON EXERCISENEW ESPP AND THE
RESERVATION OF THE AMAZON WARRANT
APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED2,500,000 SHARES OF OUR COMMON STOCK
Our Restated Certificate currently authorizes the issuance of 304,000,000 shares of our common stock, par value $0.0001 per share. Our Board is proposing for approval by our stockholders an amendment to our Restated Certificate to increase the number of shares of our common stock we are authorized to issue by approximately 49%, from 304,000,000 shares to 454,000,000 shares. Our Restated Certificate also authorizes the issuance of 1,000,000 shares of preferred stock, par value $0.0001 per share, which would remain unchanged by the amendment to our Restated Certificate contemplated by this Proposal 5.
Background: Current Capitalization
As of April 16, 2021, our capitalization was as follows:
Based on the above capitalization information, only 22,772,544 shares of our currently authorized common stock remained unissued and unreserved and available for future issuance as of April 16, 2021.
Reasons for the Increase to Our Authorized Shares of Common Stock
The Board has determined, in its business judgment, that an increase to our authorized shares of common stock by approximately 49%, from 304,000,000 shares to 454,000,000 shares, is in the best interests of the Company and our stockholders, and as a result the Board has unanimously approved such an increase, subject to stockholder approval, and has unanimously recommended that our stockholders approve such an increase by voting in favor of this Proposal 5. In making this determination and approval, the Board considered, among other things: the potential issuance of shares of our common stock upon exercise of the Amazon Warrant as described in Proposal 4 above; our historical share issuance rates, as described below; anticipated future share requirements; guidelines and potential voting recommendations of third-party proxy advisory services, including Institutional Shareholder Services; recent practices at other public companies; and a recommendation from our management.
The Board is requesting that our stockholders approve the increase to the authorized shares of our common stock in part to enable us to provide meaningful capital resources for our business plans and strategic initiatives.
The Board is also requesting that our stockholders approve the increase to the authorized shares of our common stock to provide us with the flexibility to issue our common stock as needed for other purposes. The newly authorized shares of our common stock would be issuable for any proper corporate purpose. Historically, we have issued our common stock (or securities convertible into or exercisable or exchangeable for our common stock) for the following main reasons:
Since January 2019, we have issued common stock (or securities convertible into or exercisable or exchangeable for common stock) totaling 58,206,062 shares (on a fully diluted basis) for the reasons described above, and our Board may desire to use our common stock for these or other reasons in the future. Of these shares, since January 2019, we have issued shares of our common stock or granted equity awards in respect of shares of our common stock under our equity incentive plans for a total of 7,610,531 shares (on a fully diluted basis), and the Board believes the availability of additional shares for future compensatory purposes is an important recruiting and retention tool.
Except with respect to the issuance of shares of our common stock upon exercise of the Amazon Warrant (which we are asking our stockholders to approve in Proposal 4 and the issuance of shares of our common stock in connection with our employee stock purchase plan and equity compensation plans and awards granted thereunder, we currently have no specific understandings or commitments, oral or written, that would require us to issue a material amount of new shares of our common stock. In 2021, we anticipate deploying up to approximately $100.0 million to develop dairy RNG production projects and $45 million to $60 million to build fueling stations that will support RNG volume contracted to Amazon. If we deploy the foregoing capital, we will be required to raise significant additional capital during 2021, which may involve the issuance of a material amount of new shares of our common stock.21
Possible Effects if Proposal 5 Is Approved
If this Proposal 5 is approved by our stockholders, the Board would generally be able to issue the additional authorized shares in its discretion from time to time without further action by or approval of our stockholders, subject to and as limited by the rules and listing requirements of Nasdaq or any other then applicable securities exchange and the requirements of all applicable law, and subject to our commitment to issue and sell shares of our common stock upon exercise of the Amazon Warrant.
Approval of this Proposal 5 could have the following effects:
However, stockholders should be aware that nothing would prevent the Board from taking any such actions that it deems consistent with its fiduciary duties.
Possible Effects if Proposal 5 Is Not Approved
If this Proposal 5 is not approved by our stockholders, then the number of shares of our common stock we would be authorized to issue would remain at its current amount of 304,000,000 shares.
A failure to obtain the approval of our stockholders of this Proposal 5 could result in a lack of necessary flexibility to use equity for valid purposes. As described above, the Board believes this increase to the authorized shares of our common stock would provide us with needed flexibility to issue these shares in the future when and as necessary and on a timely basis, which would allow us to take advantage of market conditions, the availability of favorable financing and opportunities for acquisitions, in each case without the potential expense or delay incident to obtaining stockholder approval for each separate transaction or issuance. If this Proposal 5 is not approved by our stockholders, our Board would have significantly limited ability to issue equity at its discretion in the future, which could result in, among other things, difficulties retaining and recruiting executives and other personnel consistent with our business plans or an inability to effect potential future strategic or capital-raising transactions or acquisitions efficiently and when desired or otherwise believed to be advantageous to us.
Rights of Additional Authorized Shares of Common Stock
Any authorized shares of our common stock, when issued, would be part of our existing class of common stock and would have the same rights and privileges as the shares of common stock that are presently issued and outstanding.
Text and Effectiveness of the Increase to Our Authorized Shares of Common Stock
We propose to affect the increase to the authorized shares of our common stock by amending the first two sentences of Article 4.A of our Restated Certificate of Incorporation to read in their entirety as follows:
“This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of stock which this corporation is authorized to issue is 454,000,000 shares, 453,000,000 of which shall be Common Stock with a par value of $.0001 per share, and 1,000,000 of which shall be Preferred Stock with a par value of $.0001 per share.”
The only change to the language of Article 4.A being voted on in this Proposal 4 is to increase the total number of shares of our common stock we may issue by approximately 49%, from 304,000,000 shares to 454,000,000 shares, and consequently the total number of shares of stock we may issue by the same amount. Other than as set forth above, our Restated Certificate as currently in effect would remain unchanged by the amendment to affect the authorized share increase contemplated by this Proposal 5.
If this Proposal 5 is approved and adopted by our stockholders at the Annual Meeting, the increase to our authorized shares contemplated hereby would become effective upon our filing of a Certificate of Amendment to our Restated Certificate with the Secretary of State of the State of Delaware reflecting the amendments to Article 4.A thereof as set forth above, or at such other date and time as may be specified in the Certificate of Amendment. We expect to file such an amendment with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval.
No Appraisal Rights
Under applicable Delaware law, our stockholders are not entitled to appraisal rights with respect to the proposed amendment to our Restated Certificate to increase the number of authorized shares of common stock we are authorized to issue.
Required Vote and Effect of Not Casting Your Vote
Proposal 5 must be approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock entitled to vote on the proposal at the Annual Meeting. We expect that Proposal 5 will constitute a “routine” matter on which a broker, bank or other nominee is entitled to vote shares held for a beneficial owner even without receiving voting instructions from the beneficial owner. As a result, abstentions, if any, will have the same effect as a vote against this Proposal 5, and broker non-votes are not expected to occur on Proposal 5.
OUR BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL
AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES OF OUR COMMON STOCK
29
Board Committees | ||||||||||||||||
Board of Directors | Audit(1) | Compensation(1) | Nominating and Corporate Governance | |||||||||||||
Directors: | ||||||||||||||||
Andrew J. Littlefair | ||||||||||||||||
Stephen A. Scully | ♦, I | ·, ▲ | ||||||||||||||
Lizabeth Ardisana | I | © | · | |||||||||||||
Philippe Charleux | ||||||||||||||||
Thomas Maurisse | ||||||||||||||||
James C. Miller | I | ©, ▲ | ||||||||||||||
Kenneth M. Socha | I | · | · | |||||||||||||
Vincent C. Taormina | I | · | © | |||||||||||||
Parker A. Weil | I | ·, ▲ | · | |||||||||||||
Former Directors: (2) | ||||||||||||||||
John S. Herrington | I | |||||||||||||||
James E. O’Connor | I | |||||||||||||||
Philippe Montantême | ||||||||||||||||
Warren Mitchell | I | |||||||||||||||
Observer: | ||||||||||||||||
Henri-Max Ndong-Nzue(3) | √ | |||||||||||||||
Meetings: | ||||||||||||||||
Held in 2020(4) | 5(5) | 3 | 5 | 2 |
| | | | | | Board Committees | | ||||||
| | | Board of Directors | | | Audit(1) | | | Compensation(1) | | | Nominating and Corporate Governance | |
Directors: | | | | | | | | | | | | | |
Andrew J. Littlefair | | | | | | | | | | | | | |
Stephen A. Scully | | | ♦, I | | | •, ▲ | | | | | | | |
Lizabeth Ardisana | | | I | | | | | | © | | | • | |
Karine Boissy-Rousseau | | | | | | | | | | | | | |
James C. Miller III | | | I | | | ©, ▲ | | | | | | | |
Lorraine Paskett | | | | | | | | | | | | | |
Kenneth M. Socha | | | I | | | | | | • | | | • | |
Vincent C. Taormina | | | I | | | • | | | | | | © | |
Parker A. Weil | | | I | | | •, ▲ | | | • | | | | |
Laurent Wolffsheim | | | | | | | | | | | | | |
Former Directors:(2) | | | | | | | | | | | | | |
Philippe Charleux | | | | | | | | | | | | | |
John S. Herrington | | | I | | | | | | | | | | |
Thomas Maurisse | | | | | | | | | | | | | |
Philippe Montantême | | | | | | | | | | | | | |
Observer: | | | | | | | | | | | | | |
Anne de Peyrelongue(3) | | | | | | √ | | | | | | | |
Meetings: | | | | | | | | | | | | | |
Held in 2021(4) | | | 5(5) | | | 4 | | | 5 | | | 2 | |
Code.
2021.
2021.
2021.
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The functions of the Board are carried out by the full Board and, when delegated, by the Board’s committees. Each director is a full and equal participant in the major strategic and policy decisions of our Company.
Code of Ethics
Stockholder Communications with the Board
Sustainability and Safety
Sustainability Strategy
Building the Workforce for the Future of Renewable Energy:At Clean Energy, we haverecognize that a strong focus on employee and contractor safety and strive to be a zero-incident workplace for our service technicians and staff, as well as our customers using our facilities. Looking towards the future, we will continue to focus on employee recruitment, retention, and engagement,diverse workforce with a specific emphasis on diversity, equality,culture of inclusivity and inclusion in all areas ofsafety is critical to our success as a company. We understandIn alignment with global environmental, social and governance reporting, we recognize the importance of maintaining a diverse and inclusive workforce and supplier base that is reflective of the communities in which we operate. We acknowledge the lack of diversity in the energy sector and strive to be part of the solution. We are committedThe safety of our employees and contractors is also a top priority, and we strive to buildingbe a diversezero-incident workplace for our service technicians and inclusive leadership team and workforce.
staff, as well as our customers using our facilities.
by hiring local suppliers whenever possible.
Goals and Commitments
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29 | |
| |
Name | | Age | | | Position(s) and Office(s) | | |
Andrew J. Littlefair | | 61 | | | President, Chief Executive Officer and Director | | |
Robert M. Vreeland | | 61 | | | Chief Financial Officer | | |
Mitchell W. Pratt | | 62 | | | Chief Operating Officer and Corporate Secretary | | |
Barclay F. Corbus | | 55 | | | Senior Vice President, Strategic Development and Renewable Fuels | |
Impact of COVID-19
California
We have adopted and applied protocols and procedures in accordance with federal, state, and local government policies and mandates and Centers for Disease Control guidelines for our offices. Specifically, we have implemented enhanced cleaning and disinfecting protocols and procedures like temperature and COVID-19 screening questionnaires for the health and safety of our employees, customers, and the communities in which we operate. We have provided personal protective equipment (including masks and gloves) and hand sanitizer, we have modified office seating, we expect all our employees to maintain appropriate physical distancing, and we continue to restrict employee travel in accordance with the various state health orders.
We began to see the negative effects of COVID-19 on volumes delivered in mid-March 2020 and continued to see declines in volumes delivered through December 31, 2020, as compared to 2019. Our volumes bottomed in the second quarter of 2020 and improved through year-end albeit at a slower pace than expected, with volumes delivered for the fourth quarter of 2020 increasing 7% over the second quarter of 2020. While volumes delivered in December 2020 were 2% lower compared to December 2019, this decline was lower than the decline of 4% when comparing September 2020 to September 2019. The most significant negative effects of COVID-19 in relation to our volumes were experienced in the airports (fleet services) and public transit customer markets, which were down by between 15% and 31% during 2020 compared to 2019 due to federal, state and local government mandates to restrict normal daily activities, as well as travel bans, quarantines and “shelter-in-place” orders. The refuse and trucking markets grew in 2020 compared to 2019, due to strong demand.
Our volume of GGEs delivered for the year ended December 31, 2020 declined 5% compared to the prior year. It is possible that the prolonged effect of the COVID-19 pandemic could negatively affect our future volumes. Declines in volume have resulted and could continue to result in lower gross margin dollars year-over-year and likely a lower gross margin per GGE due to lower output on fixed operating costs and the effect of less revenue from Environmental Credits. Lower volumes have affected and may continue to affect our alternative fuels tax credit (“AFTC”) revenue as a portion of the decline in volume is from AFTC-eligible volumes. In 2020 we had lower operating expenses, which helped mitigate the lower gross profit margins from lower volumes.
Key 2020-20212021-2022 Pay Decisions
• For 2021 the compensation committee maintained Mr. Littlefair’s base salary at his 2020 level (it has been at the same level since 2015) and increased the base salaries of Messrs. Vreeland, Pratt and Corbus by 13%, 8% and 8%, respectively. • Based on our performance results achieved for 2021, the compensation committee awarded cash incentives under our 2021 performance-based cash incentive plan to our named executive officers above each executive’s target incentive. • In the first quarter of • In December of 2021, the compensation committee introduced two new types of performance-based stock option awards that were granted to the named executive officers as additional long-term 32 incentives. The first new performance-based option is structured to incentivize securing additional GGEs of RNG supply via investment to increase the volume of our RNG deliveries, and the vesting of 100% of each grant is subject to the Company’s attainment of RNG supply milestones. The second new performance-based option is structured to incentivize long-term appreciation in the value of our shares, and the vesting of 100% of each grant is subject to the Company’s attainment of a stock price representing a greater than 100% premium above the closing price of a share of common stock on the grant date. The compensation committee determined in December that the Company was at a critical juncture and that it was of primary importance to incentivize the named executive officers to (1) create long-term stockholder value by increasing the Company’s price per share and (2) strategically execute on expanding our RNG business over the long-term. The December grants represent the largest component of each named executive officer’s 2021 compensation and are intended to provide a meaningful performance-based equity incentive over a number of years going forward. Because of the December grants, the compensation committee determined it will not grant any additional equity awards to named executive officers in calendar 2022.
Compensation Program Objectives and Philosophy Our compensation committee oversees the design and administration of our executive compensation program. The primary objectives of our executive officer compensation program are to attract, retain and motivate talented and dedicated executive officers; to reward individual performance and achievement of key corporate objectives, including the objectives set forth in our annual strategic plan, without promoting excessive or unnecessary risk-taking; to align the interests of our executives with those of our stockholders; and to provide compensation that we believe is fair in light of an executive’s experience, responsibilities, performance and tenure with our Company and in relation to the compensation provided to other executives of our Company and comparable executives at certain peer companies. To achieve these objectives, we maintain an executive compensation program that includes the following components: base salary, cash incentives, equity incentives, change in control and post-termination severance compensation and other benefits. The compensation committee developed our executive compensation program by drawing on its experience and judgment in establishing programs it believes are appropriately rewarding and responsible for a growth company in a developing industry. The compensation committee reviews and evaluates our executive compensation program, including its objectives and the forms of compensation used to achieve these objectives, on at least an annual basis, and adjusts the program as it deems appropriate and considers factors relevant in establishing appropriate levels and mix of compensation for our executives. Process for Determining Executive Compensation The compensation committee’s general practice is to establish the annual compensation mix and levels for each of our executives However, as discussed above and below, the compensation committee spent significant time in the third and fourth quarter of 2021 evaluating the structure of our long-term equity incentive awards, and in connection with the introduction of two new types of performance-based options, determined to grant the named executive officers their long-term incentive award in December of 2021. Because of the December grants, the compensation committee determined it will not grant any additional equity awards to named executive officers in calendar 2022. 33 Compensation Consultant Our compensation committee has the authority to engage the services of compensation consultants or other experts or advisors as it deems appropriate in fulfilling its Compensation Consultant’s In the third quarter of
beyond. Peer Group Selecting a group of our peer companies is challenging for many reasons, including principally our belief that we are the only publicly traded company, In Based on Semler Brossy’s recommendations, the compensation committee approved the following 23 companies as our peer companies for compensation purposes, which we refer to collectively as the “Peer
As of June 15, 2021 the Peer Group companies, respectively. The compensation committee believes benchmarking may not always be the most appropriate tool for setting compensation due to aspects of our business, objectives, and the way we’ve structured executive roles that may be unique to us. As a result, the compensation committee retains discretion to vary executive compensation components and For compensation decisions in 2021 and heading into 2022, the compensation committee did not tie named executive officer compensation (either specific elements of compensation or total compensation levels) to any predetermined benchmark but did continue to use the Peer Group data as one of several reference points when setting executive officer compensation levels through the exercise of its business judgment. 34 Review of Stockholder Say-on-Pay Votes Consistent with the preference of our stockholders, which was expressed at our annual meeting of stockholders held in May 2018, our stockholders can cast an advisory vote on executive compensation, or a “say-on-pay” vote, once every year, and the next such vote will occur at the Annual Meeting. At the Company’s annual meeting of stockholders held in We believe the high degree of support on our 2021 say-on-pay proposal, together with a similar high degree of support on our 2020 say-on-pay proposal, demonstrates that stockholders support our executive compensation program design. We expect to actively engage with our stockholders to discuss various compensation and governance matters and consider their feedback in determining named executive officer compensation. The compensation committee will also continue to consider the outcome of the Company’s say-on-pay votes, as well as this direct stockholder input, when making future compensation decisions for our named executive officers and in respect of our compensation program generally. Components of Compensation Our named executive officers’ compensation consists of the following components: • Base salary; • Performance-based annual cash incentives; • Equity incentives; • Change in control and post-termination severance compensation; and • Other benefits that are generally available to all of our salaried employees. The following
2021: The compensation committee views the various components of compensation as distinct methods of achieving the various objectives of our compensation program and, as a result, it generally does not believe significant compensation derived from one component should negate or reduce compensation from other components. The compensation committee does, however, review and evaluate each executive’s total compensation, and it may make decisions regarding levels of certain compensation components based on this evaluation of overall compensation, including, for instance, determinations regarding target levels under our performance-based cash incentive 35 In determining the mix and level of compensation components for our named executive officers, Mr. Littlefair typically makes recommendations to our compensation committee regarding appropriate pay. After reviewing Mr. Littlefair’s recommendations, our compensation committee makes the final determination regarding compensation mix and levels for each of our named executive officers. Although Mr. Littlefair submits recommendations to the compensation committee regarding his own proposed compensation, which the committee Mr. Littlefair’s recommendations, and the compensation committee’s decisions, regarding the mix and level of compensation components for each of our named executive officers are based on a number of factors, including, among others, the individual’s performance and contribution to our strategic plan and other business objectives; the Company’s overall performance in light of business and industry conditions; general industry trends and market reference points; the level of the individual’s responsibility; the seniority of the individual; the individual’s long-term commitment to our Company; the available pool of individuals with similar skills; retention risk for the individual; principles of pay equity and relative pay (we generally believe that executives with comparable experience, levels of responsibility and performance deserve comparable compensation, and that more experienced executives with a greater degree of responsibility and higher performance levels deserve higher levels of compensation on a relative basis); the role of each compensation component in achieving the objectives of our executive compensation program; and the compensation committee’s business judgment and experience. Base Salary We provide base salaries to recognize the experience, skills, knowledge, and responsibilities of our named executive officers; reward individual performance and contribution to our overall business goals; and retain our executives. The compensation committee reviews base salaries annually and relies on its judgment and discretion in determining the amount of each named executive officer’s base salary. Proposed base salaries are prepared by Mr. Littlefair and recommended to the compensation committee for its consideration and approval.
For 2021, the compensation committee determined to maintain Mr. Littlefair’s base salary at his 2020 level (it has been at the same level since 2015) and to increase the base salaries of Messrs. Vreeland, Pratt and Corbus by 13%, 8% and 8%, respectively. Messrs. Pratt’s and Corbus’ base salaries had not increased since 2014 and Mr. Vreeland’s base salary was increased to better align his compensation with his responsibilities and the base salaries of our other senior executives. Base salaries for our named executive officers in
Cash Incentives
2021 Performance-Based Cash Incentive Plan Our compensation committee believes cash incentives are important to focus our management on, and reward our executives for, achieving Company financial and strategic objectives on an annual basis, as well as to deliver adequate retention value when combined with our other incentive programs, which may be denominated in equity and/or designed to incentivize performance over a longer term than annually. The compensation committee has the discretion to determine performance criteria, consider factors and developments it deems relevant and award overall cash incentives in the amounts it deems appropriate. 36 Each year our compensation committee approves a performance-based cash incentive plan and pays incentives after reviewing our performance with respect to the criteria set forth in the plan. Further, our compensation committee may, in its discretion, award additional special discretionary cash incentives for extraordinary efforts or performance by our named executive officers that the compensation committee believes are not otherwise covered by the performance criteria in our performance-based cash incentive plan. for 2021 performance. As further detailed in the table below, based on our performance for 2021, the compensation committee awarded Mr. Littlefair an incentive under our performance-based plan equal to
In
for 2021. For • 33% was based on our adjusted EBITDA, which is a non-GAAP financial measure described below; • 25% was based on the volume of GGEs of RNG, CNG and LNG we delivered; • 22% was based on the achievement (as determined in the compensation committee’s sole discretion) of certain specified strategic initiatives; and • 20% was based on our volume margin, as defined below. We believe this combination of objective financial performance criteria that include both revenue and profitability measures, combined with tying a portion of the incentive to the achievement of strategic objectives, appropriately incentivized the named executive officers to achieve our business objectives for 2021. Performance Criteria.For For For EBITDA, as well as a reconciliation of adjusted EBITDA to net income (loss), which is the most comparable GAAP financial measure. 37 For The
(1) Target and actual performance amounts shown in millions. If each of the four performance criteria are achieved at the base performance level, Mr. Littlefair would be entitled to an incentive payment equal to 70% of his target bonus, while the other named executive officers would be entitled to an incentive payment equal to 50% of their base salaries. If each of the four performance criteria are achieved at the middle (target) performance level, Mr. Littlefair would be entitled to an incentive payment equal to 100% of his target bonus, while the other named executive officers would be entitled to an incentive payment equal to 70% of their base salaries. The maximum incentive payment for Mr. Littlefair is equal to 150% of his target bonus, and the maximum incentive payment for the other named executive officers is equal to 100% of their base salaries. Payouts for performance between the base and middle performance levels and between the middle and maximum performance levels are interpolated on a straight-line basis. Payouts.The compensation committee met in • Our company achieved approximately 103% of the • Our company achieved approximately 102% of the • Our company achieved in excess of the • The compensation committee
In February 38 Among other things, the • 30% will be based on our adjusted EBITDA, defined in substantially the same manner as was used for the 2021 plan; • 20% will be based on the volume of GGEs of RNG, CNG and LNG we deliver, defined in substantially the same manner as was used for the 2021 plan; • New for 2022, 10% will be based on the volume of RNG we deliver; • 20% will be based on the achievement (as determined in the compensation committee’s sole discretion) of certain specified strategic initiatives; and • 20% will be based on our volume margin, defined in substantially the same manner as was used for the 2021 plan. Equity Incentives We believe We have historically granted our named executive officers
39
Granted in 2021
These RSUs are subject to the terms and conditions of the 2016 Plan and a Notice of Grant of Restricted Stock Unit and Restricted Stock Unit Agreement, and vest according to the typical three-year vesting schedule described above. These stock options are subject to the terms and conditions of the 2016 Plan and a Notice of Grant of Stock Option and Stock Option Agreement, have an exercise price of $10.18 per share, and vest according to the typical three-year vesting schedule described above.
Throughout the third and fourth quarters of 2021, the compensation committee met and it determined that the Company was at a critical juncture and that it was of primary importance to incentivize the named executive officers to (1) create long-term stockholder value by increasing the Company’s price per share and (2) strategically execute on expanding the Company’s RNG business over the long-term. The compensation committee decided to introduce two new types of performance-based stock option awards into our executive compensation program, and made grants of these performance-based stock option awards along with additional time-based stock options to each of the named executive officers in December. The December grants represent the largest component of each named executive officer’s 2021 compensation and are intended to provide a meaningful performance-based equity incentive over a number of years going forward to incentivize the executives to execute our transformative strategy. Although the size of the December grants was larger than our historical grants, over 50% of the grant date value of each executive’s grant (and approximately 66% of the grant date value of Mr. Littlefair’s grant) will only vest and have any value to the executives if we are able to increase the closing price of our common stock by a greater than 100% premium above the closing price on the grant date. The first new performance-based option is structured to incentivize long-term RNG growth and the vesting of 100% of each grant is subject to the Company’s attainment of RNG supply through investment milestones. In 2021, RNG sales represented 78% of our total vehicle fuel sales. In order to achieve our five-year strategic plan and achieve our projected five-year RNG volume, revenue and income goals, we 40 believe we will need to make significant capital investments in order to increase our RNG supply through investment. The performance-based options are structured so that there are four separate vesting tranches, with each tranche requiring us to secure 15 million GGEs of RNG supply via investment in order to vest (i.e., the first tranche will vest if we secure 15 million GGEs of RNG supply via investment, the second tranche will vest if we secure an additional 15 million GGEs of RNG supply via investment for a total of 30 million GGEs, the third tranche will vest if we secure an additional 15 million GGEs of RNG supply via investment for a total of 45 million GGEs and the final tranche will vest if we secure an additional 15 million GGEs of RNG supply via investment for a total of 60 million GGEs). We believe these represent challenging multi-year goals that if the named executive officers are able to achieve, will help drive our transformative strategic plan and the achievement of our future RNG volume, revenue and income goals. Each named executive officer must also remain in continued service for our Company at each vesting date in order to vest. The second new performance-based option was the largest component of each executive’s December grant and is structured to incentivize long-term appreciation in the value of our shares. The vesting of 100% of each grant is subject to our attainment of a stock price representing a greater than 100% premium above the closing price of a share of common stock on the grant date. In order for these performance-based options to vest, we must achieve an average closing price equal to or above $14.00 per share over a twenty consecutive trading day period. Each named executive must also remain in continued service for our Company on the vesting date in order to vest. Each named executive officer was also awarded an additional grant of time-based options that vest according to the typical three-year vesting schedule described above. All of these December stock options are subject to the terms and conditions of the 2016 Plan and a Notice of Grant of Stock Option and Stock Option Agreement, and have an exercise price of $6.77 per share.
As discussed above, the compensation committee spent significant time in the third and fourth quarters of 2021 evaluating the structure of our long-term equity incentive awards and designing our two new types of performance-based options. Once the design of our performance-based options was approved, the compensation committee determined to grant the named executive officers their long-term incentive awards in December of 2021 and in light of these awards has also determined to make no further long-term incentive awards in 2022. This shift in grant timing had the effect of increasing Messrs. Littlefair’s, Vreeland’s, Pratt’s and Corbus’ 2021 compensation by $6,537,500, $2,826,750, $2,826,750 and $2,941,250, respectively. Because of the December grants, the compensation committee determined it will not grant any additional equity awards to named executive officers in calendar 2022. Change in Control and Post-Termination Severance Compensation Our employment agreements with our named executive officers, described under “Employment Agreements” below, provide them certain benefits if their employment is terminated, including a termination following a change in control but excluding a termination by the Company for cause or a voluntary termination by the named executive officer without good 41 All equity awards granted to our named executive officers after November 2014, including the RSUs and stock options awarded to our named executive officers in Other Benefits We appreciate the tremendous value and contributions of our employees, and we believe providing a competitive employee benefits program is one of our most important investments. As a result, we offer an employee benefits program with a wide range of plans designed to promote the health and personal welfare of all employees, including our named executive officers. Participation in these plans is generally available to all of our employees on the same basis. The Company provides minimal perquisites to executives which are noted in the description of “All Other Compensation” disclosed in the Summary Compensation Table on page 45. Employment Agreements We entered into employment agreements with each of our named executive officers on December 31, 2015. These employment agreements have the following key terms: • Each employment agreement is passed its initial three-year term and now automatically renews on December 31 for additional one-year periods (unless either party provides notice of non-renewal). • Each named executive officer is entitled to receive an annual base salary of no less than his base salary in 2015. • Each named executive officer is eligible to receive an annual cash incentive of up to a specified percentage of his then-current annual base salary under the terms of our performance-based cash incentive plan in effect for the applicable year. Mr. Littlefair is eligible to receive 70%, 100% or 150% of $778,680 for our achievement of the base, middle and maximum performance targets, respectively, and we consider achievement of the middle performance targets to be Mr. Littlefair’s target incentive amount; each of Messrs. Vreeland, Pratt, and Corbus is eligible to receive 50%, 70% or 100% of his respective base salary for our achievement of the base, middle and maximum performance targets, respectively, and we consider achievement of the middle performance targets to be Messrs. Vreeland’s Pratt’s, and Corbus’ target incentive amount. • Each named executive officer would be entitled to receive certain severance compensation and benefits under certain circumstances upon a termination of the named executive officer’s employment with us. The details of this severance are described below under “Executive Compensation — Potential Payments Upon Termination or Change in Control.” The employment agreements condition severance payments on a so-called “double-trigger” upon a change in control. The employment agreements also do not include any “gross-up” provision for any excise taxes that may be triggered in connection with a change in control under Sections 280G and 4999 of the Code, and instead include a “best-net” cutback provision under which benefits are reduced to avoid triggering any such excise taxes unless the after-tax benefit is greater to the named executive officer without the cutback. The compensation committee determined that these terms are appropriate because they better align our severance and change of control payment practices with current market expectations and the interests of our named executive officers with those of our stockholders, while still providing a level of benefits the compensation committee believes is fair and reasonable and maintaining the retention value of these benefits. Other Compensation Policies Executive Stock Ownership Guidelines We believe it is important to encourage our named executive officers to hold a material amount of our common stock, which links their long-term economic interest directly to that of our stockholders. To achieve 42 this goal, we have established stock ownership guidelines applicable to our named executive officers. These guidelines provide that our Chief Executive Officer is required to own shares of our common stock valued at three times his annual base salary or more, and each of our Chief Financial Officer, Chief Operating Officer, Chief Marketing Officer, Senior Vice President, Strategic Development, and Senior Vice President, Sales, in each case if any person is appointed in such position, is required to own shares of our common stock valued at one times his annual base salary or more. Such level of ownership must be attained by the later of December 14, 2019 and five years after the date of an executive officer’s initial appointment as such. Stock options are not counted toward satisfaction of these stock ownership requirements. Executives who attain the applicable stock ownership level by the stated deadline will continue to satisfy the stock ownership requirements if the value of their stock holdings declines after such deadline solely due to a decrease in the trading price of our common stock. Each of our named executive officers had satisfied these stock ownership guidelines as of the record date for the Annual Meeting. Hedging and Pledging of Company Securities Our policies do not permit any of our executive officers or directors to “hedge” ownership of our securities by engaging in short sales or trading in put options, call options or other derivatives involving our securities. This means that our employees and directors may not purchase financial instruments or otherwise engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities. Further, our policies do not permit an executive officer or director to hold our securities in a margin account or pledge our securities as collateral for a loan unless the executive officer or director demonstrates to our satisfaction financial capacity to substitute other assets for Company securities in the event of a failure to meet a margin call or a default on the loan. As of the date of this Proxy Statement, none of our directors or executive officers has pledged any of the shares of our common stock he or she owns. Clawback Policy The compensation committee has adopted a formal clawback policy regarding recoupment, or a “clawback,” of cash compensation in certain circumstances. The purpose of this clawback policy is to help ensure that executives act in the best interests of the Company and our stockholders. The clawback policy requires certain of our officers, including our named executive officers, to repay or return any cash incentive or other incentive cash compensation awarded to or received by such officer(s) in the event we issue a restatement of our financial statements due to material noncompliance with any financial reporting requirements and the restatement was caused by such officer’s fraud, intentional misconduct or gross negligence. In each case, the officer(s) would be required to repay or return the incentive cash compensation awarded to or received by the officer during the 12-month period following the filing of the erroneous financial statement at issue. Pursuant to the clawback policy, in the event of any restatement of our financial statements, the compensation committee would consider a number of factors and exercise its business judgment in determining appropriate amounts, if any, to recoup. Further, the compensation committee retains the discretion to adjust or recover awards or payments if the relevant performance measures on which they are based are restated or are otherwise adjusted in a manner that would reduce the size of the award or payment. The clawback policy applies to cash compensation awarded to our officers from and after the date of its adoption. Tax and Accounting Effects In designing our compensation programs, the compensation committee considers the financial impact and tax and accounting effects that each element of compensation will or may have on the Company and our executives. One such area the compensation committee considers is the tax deductibility of each component of executive compensation. Prior to December 22, 2017, when the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law, Section 162(m) generally prohibited us from taking a tax deduction in any tax year for compensation paid to certain executive officers that exceeded $1,000,000, unless the compensation was payable only upon the achievement of pre-established, objective performance goals under a plan approved by our stockholders. As a result, we believe certain stock option 43 other performance-based compensation paid to our named executive officers, qualify as such. Under the TCJA, the exception for performance-based compensation under Section 162(m) has been repealed, so that the $1,000,000 limit on tax deductions in a tax year generally applies to anyone serving as our chief executive officer or our chief financial officer at any time during a taxable year as well as our top three other highest-compensated executive officers serving at fiscal year-end. These changes generally We, the compensation committee of the Board of Clean Energy Fuels Corp., have reviewed and discussed the Compensation Discussion and Analysis (set forth above) with management of the Company, and based on such review and discussion, have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
44 EXECUTIVE COMPENSATION Summary Compensation Table The following table summarizes the total compensation awarded to, earned by or paid to each of our named executive officers for
2021:
(1)
The amounts shown in this column represent the grant date fair value of awards granted in each of the periods calculated in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, “Compensation Mr. Corbus ($916,000). (2) The amounts shown in the Non-Equity Incentive Plan Compensation column represent the cash incentives paid under our performance-based cash incentive plan, (3) The amounts shown in this column represent, (a) for all named executive officers, the Company’s matching contributions under its savings plan qualified under Section 401(k) of the Code, and (b) for Mr. Littlefair in 45 Grants of Plan-Based Awards The following table summarizes all plan-based awards granted to each of the named executive officers in
(1) The amounts shown in these columns represent the possible payouts under the (2) The amounts shown in this column represent shares subject to performance-based option awards granted on December 7, 2021 pursuant to our 2016 Plan and have vesting schedules as follows. For 250,000 options granted to Mr. Littlefair, 150,000 options granted to each of Mr. Vreeland and Pratt and for 200,000 options granted to Mr. Corbus: 25% of the total shares subject to the stock option award vest upon each achievement of a specific volume hurdle related to securing certain levels of RNG GGEs. For 1,000,000 options granted to Mr. Littlefair and 375,000 options granted to each of Mr. Vreeland, Pratt and Corbus: 100% of the total shares subject to the stock option award vest immediately, if at all, if the closing share price of the Company’s common stock on Nasdaq equals or exceeds $14.00 for 20 consecutive trading days. (3) The amounts shown in this column represent shares subject to RSU awards granted on The amounts shown in this column represent shares subject to option awards granted on (5)
The amounts shown in this column represent the grant date fair value of awards granted in 46 Outstanding Equity Awards at Fiscal Year End The following table summarizes outstanding equity awards held by our named executive officers at December 31,
47
(1) Except as otherwise noted, all option and RSU awards granted before May 2016 were granted under our 2006 Plan and after May 2016 were granted under our 2016 Plan, and all such awards vest as follows: 34% of the shares subject to the award vest on the first anniversary of the date of grant and 33% of the shares subject to the award vest on each subsequent anniversary until all shares are fully vested, subject to continuing service by the named executive officer on each vesting date. The treatment of these option and RSU awards upon a termination or change of control is described under “Potential Payments Upon Termination or Change in Control” below. (2)
Represents an option award granted on February 25, 2019.
(3) Represents an option award granted on February 25, 2020.
(4) Represents a RSU award granted on February 25, 2020. (5) Represents an option award granted on January 21, 2021. (6) Represents a RSU award granted on January 21, 2021. (7) Represents an option award granted on December 7, 2021. (8) Represents performance-based option awards granted on December 7, 2021. For 250,000 options granted to Mr. Littlefair, 150,000 options granted to each of Messrs. Vreeland and Pratt and for 200,000 options granted to Mr. Corbus: 25% of the total shares subject to the stock option award vest upon each achievement of a specific volume hurdle related to securing certain levels of RNG GGEs. For 1,000,000 options granted to Mr. Littlefair and 375,000 options granted to each of Messrs. Vreeland, Pratt and Corbus: 100% of the total shares subject to the stock option award vest immediately, if at all, if the closing share price of the Company’s common stock on Nasdaq equals or exceeds $14.00 for 20 consecutive trading days. (9) Amount determined by multiplying the unvested stock awards by 2021. 48 Option Exercises and Stock Vested The following table summarizes vesting of stock awards for each of our named executive officers in
2021:
Employment Agreements On December 31, 2015, we entered into an employment agreement with each of our named executive officers. See the description under “Compensation Discussion and Pension Benefits, Non-Qualified Defined Contribution and Other Deferred Compensation Plans We do not have any defined-benefit plans that provide for payments or other benefits to our named executive officers at, following or in connection with their retirement. We also do not have any non-qualified defined contribution plans or other deferred compensation plans that provide for the deferral of compensation on a basis that is not tax-qualified. Potential Payments Upon Termination or Change in Control The narrative and tables below describe the amount of compensation to be paid to our named executive officers in the event of a termination of employment or a change in control. The amount of compensation payable to each of our named executive officers upon a voluntary termination, voluntary termination for good reason, involuntary without cause termination, failure by us to renew the named executive officer’s employment agreement upon its expiration, for-cause termination, change in control of our Company, termination in connection with a change in control and termination due to disability or death is shown in tabular format. Except as otherwise noted, the amounts shown in these tables assume that each such termination or change in control was effective as of December 31, Severance Compensation under Employment Agreements Pursuant to the terms of the employment agreement for each named executive officer: If we terminate a named executive officer without “cause” 49 incentive plan, and (E) any vacation pay accrued and not paid as of the date of termination; (2) after the end of the calendar year in which the termination occurs, a lump-sum payment of an amount equal to the annual cash incentive that would be payable to the named executive officer under our performance-based cash incentive plan in respect of such year (based on the criteria applicable for that year) without any pro-rating; and (3) continuing participation, at our expense, for a period of one year from the date of termination in the benefit programs in which the named executive officer was enrolled at the time of termination. If we terminate any named executive officer’s employment without cause or do not renew his employment agreement within six months before or one year after the date of a “change in control” (as such term is defined in the employment agreement), or if a named executive officer resigns for good reason within six months before or one year after the date of the change in control, then the named executive officer would be entitled to the severance compensation described above, except that the lump-sum payment described in (1) above for all named executive officers except Mr. Littlefair would consist of 225% of his then-current annual base salary, 225% of his previous year’s annual cash incentive actually earned under our performance-based cash incentive plan, and the amounts described in (A), (B) and (E); and the lump-sum payment described in (1) above for Mr. Littlefair would consist of 300% of his then-current annual base salary, 300% of his previous year’s annual cash incentive actually earned under our performance-based cash incentive plan, and the amounts described in (A), (B) and (E). If any named executive officer ceases to be an employee due to death or disability, then the named executive officer would be entitled to the amounts described in (1)(A), (B) and (E) and (2) above, except that the amount described in (2) above would be pro-rated based on the number of weeks during the last fiscal year during which the named executive officer was an employee. If, at any time that our common stock is not listed or quoted on a national securities exchange or an over-the-counter quotation system, (i) the employment of either of Messrs. Littlefair or Pratt is terminated for cause, we would be entitled, at our option, to repurchase all or a portion of our stock owned by him, or (ii) the employment of either of these named executive officers is terminated due to death or disability, we would be required to repurchase all of our stock owned by him. In consideration of the receipt of any of the severance compensation described above and as a precondition to their receipt, each named executive officer would be required to execute and deliver, and not revoke, a release in favor of us in the form attached to his employment agreement. For purposes of the tables below, we have assumed that the amounts described in (1)(A) and (B) above have already been paid to the applicable named executive officer or are $0. For purposes of each such named executive officer’s employment agreement: “Cause” means (1) the named executive officer committing a material act of dishonesty against us, (2) the named executive officer being convicted of a felony involving moral turpitude or (3) the named executive officer committing a material breach of his confidentiality, trade secret, non-solicitation or invention assignment obligations under his employment agreement. “Good reason” means the named executive officer resigns from his employment after we (1) have materially diminished the named executive officer’s duties, authority, responsibility, annual base salary or annual incentive compensation opportunity, (2) materially breach the employment agreement; (3) change the person to whom the named executive officer reports, or (4) change the location of the named executive officer’s principal place of employment “Change in control” means (1) any “person” 50 series of related transactions) of all or substantially all of the assets of the Company or a liquidation or dissolution of the Company, or (4) individuals who, as of the date of the employment agreement, constitute the Company’s board of directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Company’s board of directors; provided that, other than in connection with an actual or threatened proxy contest, any individual who becomes a director subsequent to the date of the employment agreement whose election, or nomination for election by the stockholders of the Company, was approved by the vote of at least a majority of the directors then in office shall be deemed a member of the Incumbent Board.
Vesting of Options The terms of the option If the Company experiences a “change in control,” as defined in the For purposes of the tables below, the “spread” value (i.e., the excess of Potential Payments to Each Named Executive Officer Andrew J. Littlefair The following table shows the potential cash payments or other benefits to be provided to our President and Chief Executive Officer, Andrew J. Littlefair, if a termination and/or a change in control had occurred as of December 31,
51
(1) At December 31, 2021, Mr. Littlefair held 162,792 RSUs that had not vested. The amounts in this row were determined by multiplying the unvested RSUs by $6.13, the closing price of our common stock on December 31, 2021. (2) At December 31, 2021, Mr. Littlefair held 116,201 options that had not vested and have an exercise price less than $6.13, the closing price of our common stock on December 31, 2021. The amounts in this row were determined by multiplying the total number of unvested shares underlying the options by the excess of $6.13 over the exercise price for such options. Robert M. Vreeland The following table shows the potential cash payments or other benefits to be provided to our Chief Financial Officer, Robert M. Vreeland, if a termination and/or a change in control had occurred as of December 31,
52
(1) At December 31, 2021, Mr. Pratt held 90,972 RSUs that had not vested. The amounts in this row were determined by multiplying the unvested RSUs by $6.13, the closing price of our common stock on December 31, 2021. (2) At December 31, 2021, Mr. Pratt held 62,964 options that had not vested and have an exercise price less than $6.13, the closing price of our common stock on December 31, 2021. The amounts in this row were determined by multiplying the total number of unvested shares underlying the options by the excess of $6.13 over the exercise price for such options. Barclay F. Corbus The following table shows the potential cash payments or other benefits to be provided to our Senior Vice President, Strategic Development and Renewable Fuels, Barclay F. Corbus, if a termination and/or a change in control had occurred as of December 31,
(1) At December 31, 2021, Mr. Corbus held 90,972 RSUs that had not vested. The amounts in this row were determined by multiplying the unvested RSUs by $6.13, the closing price of our common stock on December 31, 2021. (2) At December 31, 2021, Mr. Corbus held 62,964 options that had not vested and have an exercise price less than $6.13, the closing price of our common stock on December 31, 2021. The amounts in this row were determined by multiplying the total number of unvested shares underlying the options by the excess of $6.13 over the exercise price for such options. Pay Ratio We are required by applicable SEC rules to disclose the annual total compensation of our Chief Executive Officer, the median annual total compensation of all of our other employees, and the ratio of these two amounts. 53 In determining the median annual total compensation of our employees other than our Chief Executive Officer, we started by preparing a list of all such employees as of December 31, We believe this pay ratio is a reasonable estimate calculated in a manner consistent with applicable SEC rules. In light of the many different methodologies, exclusions, estimates and assumptions companies are permitted to use in determining an estimate of their respective pay ratios, as well as the differing employment and compensation practices and industry standards that impact these ratios, our estimated pay ratio information may not be comparable to the pay ratio information reported by other companies, and we discourage the use of this information as a basis for comparison between companies. Neither our compensation committee nor our management used our pay ratio information in making compensation decisions for Risks Related to Compensation Policies and Practices The compensation committee regularly monitors and considers whether our overall compensation programs, including our executive compensation program, create incentives for employees to take excessive or unreasonable risks that could materially harm our Company. Although risk-taking is a necessary part of any business, the compensation committee focuses on aligning the Company’s compensation policies with the long-term interests of the Company and its stockholders and avoiding short-term rewards for management decisions that could pose long-term risks to the Company. Although a portion of our executive compensation plan is performance-based, which could motivate risk-taking, we do not believe our overall compensation structure encourages excessive or unnecessary risk-taking. We believe our approach to goal-setting, the mix of different types of compensation, payouts at multiple levels of performance, evaluation of performance results, and allowance for compensation committee discretion in determining award types, levels and payouts assist in mitigating these risks, as follows: Our compensation structure includes a combination of compensation vehicles, including a competitive base salary and benefits generally available to all of our employees, equity awards to incentivize long-term performance and align the interests of our employees with those of our stockholders, annual cash incentives to reward executives for achieving Company objectives, and change in control and post-termination severance compensation to encourage retention of our key executives. To discourage excessive or unnecessary risk-taking, for To help mitigate risks of overpayment due to fraudulent, intentional or grossly negligent errors, our clawback policy permits us, under certain circumstances, to recover certain cash compensation in the event of a restatement of our financial statements or excess payments of performance-based compensation in the event of a restatement or other adjustment of the performance measures on which the payments are based. We further believe that our internal legal and financial controls appropriately mitigate the probability and potential impact of an individual employee committing our Company to a harmful long-term business transaction in exchange for a short-term compensation benefit. 54 Based on the factors described above, we believe our Calculation of The following table shows adjusted EBITDA as we defined it for
55 DIRECTOR COMPENSATION Overview We use cash and equity compensation to attract and retain qualified candidates to serve on our Board. The amount and type of cash and equity compensation awarded to non-employee directors is determined by the compensation committee each year in its sole discretion. In setting non-employee director compensation, the compensation committee considers a variety of factors, including the significant amount of time that our directors spend in fulfilling their duties to our Company, as well as the level of experience and skill required of the members of the Board. We have also awarded compensation to individual non-employee directors or directors serving in certain positions on our Board or its committees in recognition of outstanding service or efforts on the Company’s behalf. Further, in setting director compensation, our compensation committee considers that a director’s independence may be jeopardized if director compensation and perquisites exceed customary levels, if the Company makes charitable or political contributions to organizations with which a director is affiliated or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which a director is affiliated. Directors who are our employees receive no additional compensation for their services as directors. In addition, for After reviewing the factors described above and others that it considered relevant, the compensation committee approved the non-employee director compensation program described below for Cash For 2021
All of our non-employee directors receive base cash compensation of $60,000 per year; Audit committee members (other than the Chairman) receive an additional $2,500 in cash compensation per year in recognition of their additional responsibilities; The Chairman of the audit committee receives an additional $10,000 per year in recognition of his additional responsibilities; and The Chairman of the Board receives an additional $60,000 per year in recognition of his additional responsibilities. Equity
Each non-employee director (other than Messrs. Charleux, Maurisse and The December option awards were granted to the non-employee directors in lieu of making any annual long-term equity awards to the directors in 2022. Because of the December grant timing and the way the SEC’s disclosure rules work, the director compensation table below effectively includes two-years’ worth of 56 equity awards, which we believe overstates the compensation received by the non-employee directors in 2021. The chart below illustrates the value of the two equity awards granted to the non-employee directors in 2021.
(1) The grant date value of Ms. Paskett’s award was $420,000. Because of the December grants, the Board does not intend to grant any non-employee directors any additional equity awards in calendar 2022. Director Compensation Table The following table summarizes the compensation we paid to directors who are not employees of our Company for
(1) Andrew J. Littlefair, our President and Chief Executive Officer, is not included in this table because he is an employee of the Company and thus receives no additional compensation for his services as a director. The compensation received by Mr. Littlefair as an employee of the Company is shown in the Summary Compensation Table above. each voluntarily waived their right to receive compensation for 2021 and 2022. (2) On (3) As of December 31, (4) As of December 31,
(5) As of December 31, 2021, Mr. Herrington did not hold any options. (6) As of December 31, (7) As of December 31, 2021, Mr. Socha had fully vested and outstanding options to purchase the following: 25,000 shares at an exercise price of $15.11; 20,000 shares at an exercise price of $13.09; 20,000 shares at an exercise price of $11.93; 20,000 shares at an exercise price of $5.54; 42,500 shares at an exercise price of $2.19; 42,000 shares at an exercise price of $2.56; 75,000 shares at an exercise price of $10.18; and 100,000 outstanding unvested options to purchase shares at an exercise price of $6.77. (8) As of December 31, 2021, Mr. Taormina had fully vested and outstanding options to purchase the following:; 25,000 shares at 57 an exercise price of $15.11; 20,000 shares at an exercise price of $13.09; 20,000 shares at an exercise price of $11.93; 20,000 shares at an exercise price of $5.54; 40,000 shares at an exercise price of $1.37; 42,500 shares at an exercise price of $2.19;
(9) As of December 31,
(10) As of December 31, $6.49. 58 EQUITY COMPENSATION PLANS Securities Authorized for Issuance Under Equity Compensation Plans The following table summarizes information about compensation plans under which our equity securities are authorized for issuance as of December 31,
(1) Of these shares, (2) This weighted-average exercise price does not reflect (3) Represents (a) 59 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Related Party Transactions Except as described below, since January 1, Relationships with
During 2021, the Company recognized revenue of $3.3 million and $0.4 million, respectively, related to LNG sold to TotalEnergies and its affiliates in the ordinary course of business and AFTC credits associated therewith. The Company purchased $0.6 million in parts and materials from TotalEnergies in the ordinary course of business during 2021. TotalEnergies Agreements On May 9, 2018, we entered into a stock purchase agreement (the “Purchase Agreement”) with TMS for the sale and issuance to TMS of up to 50,856,296 shares of our common stock, representing approximately 25% of the outstanding shares of our common stock and the largest ownership position of our Company, for a per share purchase price of $1.64 and an aggregate cash purchase price of $83.4 million. The Pursuant to the Purchase Agreement, TMS has the right to designate up to two individuals to serve as directors on our Board. Subject to certain limited conditions as described in the Purchase Agreement, including compliance with our governing documents and all applicable laws, rules and regulations, we will be obligated to appoint or nominate for election as directors of our Company the individuals so designated by TMS and, from and after such appointment or election, either (1) appoint one of these individuals to serve on the audit committee of the Board and any other Board committees that may be formed from time to time for the purpose of making decisions that are strategically significant to our Company, or (2) nominate another individual as an observer of such Board committees, who is to be invited to attend all meetings of such committees in a non-voting observer capacity. TMS’ rights and our obligations relating to these designees and observers continue until (and if) (a) with respect to TMS’ right to designate two individuals to serve as directors on our Board and an optional observer to serve on certain Board committees, TMS’ voting power is less than 16.7% but more than 10.0%, and (b) with respect to TMS’ right to designate one individual to serve as a director on our Board and an optional observer to serve on certain Board committees, TMS’ voting power is less than 10.0%, in each case measured in relation to the votes then entitled to be cast in an election of directors by our stockholders. The Purchase Agreement also provides that, until the later of May 9, 2020 or such date when TMS ceases to hold more than 5% of our common stock then outstanding, among other similar undertakings and subject to customary conditions and exceptions, TMS and its affiliates are prohibited from purchasing shares of our common stock or otherwise pursuing transactions that would result in TMS owning more than 30% of our equity securities without the approval of our Board. In connection with the Purchase Agreement on May 9, 2018, we and all of our then-directors and officers entered into a voting agreement with TMS. Pursuant to the voting agreement, each of our directors and officers agreed to vote all shares of our common stock presently or hereafter owned or controlled by such director or officer, in any vote of our stockholders that may be held from time to time, in favor of the election of the individuals designated by TMS to serve as directors on our Board. Each of our directors and officers has also granted to TMS a proxy to vote all such shares in accordance with the terms of the voting agreement. For each of our directors and officers party to the voting agreement, the voting obligations contained in the agreement continue from and after, and for so long as, TMS’ director designation rights 60 are in effect, as described above, and such director or officer continues to serve in such capacity for our Company Pursuant to the Purchase Agreement, we also entered into a registration rights agreement with TMS on June 13, 2018. Pursuant to the registration rights agreement, we became obligated to, at our expense, (1) file one or more registration statements with the SEC to cover the resale of the shares of our common stock purchased by TMS under the Purchase Agreement, (2) use our commercially reasonable efforts to cause all such registration statements to be declared effective in a timely manner, (3) use our commercially reasonable efforts to maintain the effectiveness of such registration statements until all such shares are sold or may be sold without restriction pursuant to applicable rules under the Securities Act, and (4) make and keep available adequate current public information and timely file with the SEC all required reports and other documents until all such shares are sold or may be sold without restriction. If such registration statements are not filed or declared effective as described above or any such effective registration statements subsequently become unavailable for more than 30 days in any 12-month period while they are required to maintained as effective, then we would be required to pay liquidated damages to TMS equal to 0.75% of the aggregate purchase price for the shares remaining eligible for such registration rights each month for each such failure (up to a maximum of 4.0% of the aggregate purchase price for the shares remaining eligible for such registration rights each year). Credit Support Agreement On January 2, 2019, we entered a credit support agreement Following any payment by THUSA to the Lender under the Guaranty, we would be obligated to immediately pay to THUSA the full amount of such payment plus interest on such amount at a rate equal to LIBOR plus 1.0%. In addition, we would be obligated to pay and reimburse THUSA for all reasonable out-of-pocket expenses it incurs in the performance of its services under the CSA, including all reasonable out-of-pocket attorneys’ fees and expenses incurred in connection with the payment to the Lender under the Guaranty or any enforcement or attempt to enforce any of our obligations under the CSA. The CSA includes customary representations and warranties and affirmative and negative covenants by us. In addition, upon the occurrence of a “Trigger Event” and during its continuation, THUSA may, among other things: elect not to guarantee additional Loans; declare all or any portion of the outstanding amounts we owe THUSA under the CSA to be due and payable; and exercise all other rights it may have under applicable law. Each of the following events constitutes a Trigger Event: we default with respect to any payment obligation under the CSA; any representation or warranty made by us in the CSA was false, incorrect, incomplete or misleading in any material respect when made; we fail to observe or perform any material covenant, obligation, condition or agreement in the CSA; or we default in the observance or performance of any agreement, term or condition contained in any other agreement with THUSA or an affiliate of THUSA. As security for our obligations under the CSA, on January 2, 2019, we entered into a pledge and security agreement with THUSA and delivered a collateral assignment of contracts to THUSA, pursuant to which we collaterally assigned to THUSA all fueling agreements we enter into with participants in our Zero Nowtruck financing program. In addition, on January 2, 2019, we entered into a lockbox agreement with THUSA and PlainsCapital Bank, under which we granted THUSA a security interest in the cash flow generated by the fueling agreements we enter into with participants in the Zero Now program. Until the occurrence of a Trigger Event or Fundamental Trigger Event (as described below) under the CSA, we have the freedom to operate in the normal course and there are no restrictions on the flow of funds in and out of the lockbox account established pursuant to the lockbox agreement. Upon the occurrence of a Trigger Event under the CSA, all funds in the lockbox account will be: first, used to make scheduled debt repayments of Loans and interest thereon; and second, released to us. Further, upon the occurrence of a “Fundamental 61 Trigger Event” under the CSA and during its continuation, in addition to exercising any of the remedies available to THUSA upon the occurrence of a Trigger Event as described above: all participants in the Zero Now program would pay amounts owed under their fueling agreements with us directly into the lockbox account; under a “sweep” mechanism, all cash in the lockbox account would be used to prepay all outstanding Loans; no other disbursements from the lockbox account could be made without THUSA’s consent; and THUSA would retain dominion over the lockbox account and the funds in the account would remain as security for our payment and reimbursement obligations under the CSA. Each of the following events constitutes a Fundamental Trigger Event: we default in the observance or performance of any agreement, term or condition contained in the term credit agreement governing the Loans that would constitute an event of default thereunder, up to or beyond any grace period provided in such agreement, unless waived by the Lender; we default in the observance or performance of any agreement, term or condition contained in any evidence of indebtedness other than such term credit agreement, and the effect of such default is to cause, or permit the holders of such indebtedness to cause, acceleration of indebtedness in an aggregate amount for all such collective defaults of $20.0 million or more; voluntary and involuntary bankruptcy and insolvency events; and the occurrence of a change of control of our Company. The CSA will terminate following the later of: the payment in full of all of our obligations under the CSA; and the termination or expiration of the Guaranty following the maturity date of the last outstanding Loan or December 31, 2023, whichever is earlier. During 2021, we paid TotalEnergies $0.3 million related to the guaranty fee under the CSA. Commodity Swap Arrangements In October 2018, we entered into commodity swap arrangements with
settlements on commodity swap contracts. Joint Venture On March 3, 2021, we entered an agreement (“ Relationship Involving Ms. Paskett The spouse of Ms. Paskett, who was appointed to our Akin Gump. Policies and Procedures for Related Party Transactions Our audit committee charter requires that all related party transactions, as defined in applicable SEC rules, be reviewed and approved by our audit committee or another independent body of the Board, in 62 accordance with applicable Nasdaq rules. When evaluating any such transaction, our audit committee focuses on whether the terms of the transaction are at least as favorable to us as terms we would receive on an arm’s-length basis from an unaffiliated third party. Each of the transactions described above that was required to be reviewed and approved by the audit committee in accordance with its charter was so reviewed and approved. 63 AUDIT COMMITTEE REPORT The audit committee is responsible for overseeing our accounting, auditing and financial reporting practices on behalf of the Board. Management is responsible for the preparation and presentation of our consolidated financial statements, including establishing accounting and financial reporting principles and establishing and maintaining systems of internal control over financial reporting. Our independent registered public accounting firm is responsible for expressing an opinion on our consolidated financial statements and an opinion on our internal control over financial reporting. In performing its responsibilities, the audit committee has reviewed and discussed, with management and KPMG LLP, our independent registered public accounting firm, the audited consolidated financial statements included in the Annual Report. The audit committee has also discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. Additionally, the audit committee has received the written disclosures and the letter from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the audit committee concerning independence and has discussed with KPMG LLP its independence. Based on the reviews and discussions referred to above, the audit committee recommended to the Board that the audited consolidated financial statements of Clean Energy Fuels Corp. be included in our annual report on Form 10-K for the year ended December 31, Audit Committee: James C. Miller III, Chairman Stephen A. Scully Vincent C. Taormina Parker A. Weil This audit committee report shall not be deemed to be “soliciting material,” or to be 64 OTHER MATTERS Stockholder Proposals for Stockholder Proposals to be Considered for Inclusion in Our Proxy Materials Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our Director Nominations or Stockholder Proposals to be Brought Before an Annual Meeting But Not Included in Our Proxy Materials Our amended and restated bylaws provide that, for stockholder nominations of directors or other proposals to be considered at an annual meeting but not sought to be included in our proxy materials for the meeting, the stockholder must have given timely written notice of the director nomination or proposal to us. To be timely for our In addition, a stockholder who intends to solicit proxies in support of director nominees other than the Company’s nominees at the 2023 annual meeting of stockholders must provide written notice to the Company setting forth the information required by Rule 14a-19 under the Exchange Act, unless the required information has been provided in a preliminary or definitive proxy statement previously filed by the stockholder. Such written notice must be provided in accordance with Rule 14a-19 no later than March 20, 2023. If we change the date of the 2023 annual meeting of stockholders by more than 30 days from the date of this year’s Annual Meeting, written notice must be provided by the later of 60 days prior to the date of the 2023 annual meeting of stockholders or the 10th day following the day on which public announcement of the date of the 2023 annual meeting of stockholders is first made. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our amended and restated bylaws as described above. Other Business at the Annual Meeting We have not received any notice of other business to come before the Annual Meeting as of the date of this Proxy Statement and we do not otherwise know of any other business to be submitted at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the individuals we have designated as proxies for the Annual Meeting will vote on such matters in their discretion. It is the intention of such individuals to vote the shares represented by proxy at the Annual Meeting on any such matter as recommended by the Board or, if no recommendation is given, in accordance with their judgment. 65 More Information About the Company For more information about the Company, please refer to our Annual Report, which accompanies this Proxy Statement. Our annual report on Form 10-K for the year ended December 31, Report, was filed with the SEC on
By order of the
MITCHELL W. PRATT Corporate Secretary
66 Annex A Proposed 2022 Employee Stock Purchase Plan CLEAN ENERGY FUELS CORP. 2022 EMPLOYEE STOCK PURCHASE PLAN The following constitute the provisions of the 2022 Employee Stock Purchase Plan (the “Plan”) of Clean Energy Fuels Corp (the “Company”). 1. Purpose. The purpose of the Plan (as defined below) is to provide Employees (as defined below) of the Company (as defined below) and its Designated Parents (as defined below) or Subsidiaries (as defined below) with an opportunity to purchase Common Stock (as defined below) of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code (as defined below) and the applicable regulations thereunder. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 2. Definitions. As used herein, the following definitions shall apply: (a) “Administrator” means either the Board or a committee of the Board that is responsible for the administration of the Plan as is designated from time to time by resolution of the Board. (b) “Applicable Laws” means the legal requirements relating to the administration of employee stock purchase plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code and the applicable regulations thereunder, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to participation in the Plan by residents therein. (c) “Board” means the Board of Directors of the Company. (d) “Code” means the Internal Revenue Code of 1986, as amended. (e) “Commission” means the U.S. Securities and Exchange Commission. (f) “Common Stock” means the common stock of the Company, par value of $0.0001 per share, and such other securities or property as may become the subject of Options pursuant to an adjustment made under Section 18. (g) “Compensation” means an Employee’s base salary from the Company or one or more Designated Parents or Subsidiaries, including such amounts of base salary as are deferred by the Employee: (i) under a qualified cash or deferred arrangement described in Section 401(k) of the Code; or (ii) to a plan qualified under Section 125 of the Code. “Compensation” does not include overtime, bonuses, annual awards, other incentive payments, reimbursements or other expense allowances, fringe benefits (cash or non-cash), moving expenses, deferred compensation, contributions (other than contributions described in the first sentence) made on the Employee’s behalf by the Company or one or more Designated Parents or Subsidiaries under any employee benefit or welfare plan now or hereafter established, and any other payments not specifically referenced in the first sentence. The Administrator may establish, in its discretion and on a uniform and nondiscriminatory basis, a different definition of Compensation prior to an Offer Date for all Options to be granted on such Offer Date, which definition may vary among Participants who are employed by the Company or different Designated Parents or Subsidiaries. (h) “Corporate Transaction” means any of the following transactions, unless the Administrator provides otherwise: (i) any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity the stockholders of which did not own all or substantially all of the Common Stock in substantially the same proportions as immediately before such transaction); A-1 (ii) the sale of all or substantially all of the Company’s assets to any other person or entity (other than a wholly-owned subsidiary of the Company); (iii) the acquisition of beneficial ownership of a controlling interest of fifty percent (50%) or more (including power to vote) in the outstanding shares of Common Stock by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Exchange Act); (iv) the dissolution or liquidation of the Company; (v) a contested election of directors, as a result of which or in connection with which the persons who were members of the Board before such election or their nominees cease to constitute a majority of the Board; or (vi) any other event specified, prior to the commencement of an Offer Period, by the Board. Notwithstanding the foregoing, the term “Corporate Transaction” shall not include any underwritten public offering of shares registered under the Securities Act of 1933, as amended. (i) “Designated Parents or Subsidiaries” means any of the Parents or Subsidiaries, which have been designated by the Administrator from time to time as eligible to participate in the Plan. (j) “Effective Date” means June 30, 2022. However, should any Parent or Subsidiary become a Designated Parent or Subsidiary after such date, then the Administrator, in its discretion, shall designate a separate Effective Date with respect to the employee-participants of such Designated Parent or Subsidiary. (k) “Employee” means any individual, including an officer or director, who is an employee of the Company or a Designated Parent or Subsidiary for purposes of Section 423 of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the individual’s employer. Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the day that is three (3) months and one (1) day following the start of such leave, for purposes of determining eligibility to participate in the Plan. (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended. (m) “Exercise Date” means the last day of each Offer Period. (n) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on one or more established stock exchanges, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid were reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported); (ii) If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (iii) In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, its Fair Market Value thereof shall be determined by the Administrator in good faith. (o) “New Exercise Date” has the meaning set forth in Section 18(b). A-2 (p) “Offer Period” means an Offer Period established pursuant to Section 4 hereof. (q) “Offering” means an offer under this Plan of an Option that may be exercised during an Offer Period. For purposes of the Plan, all Employees eligible to participate pursuant to Section 3 will be deemed to participate in the same Offering unless the Administrator otherwise determines that Employees of the Company or one or more Designated Parent or Subsidiary will be deemed to participate in separate Offerings, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Section 1.423-2(a)(1) of the Treasury regulations issued under Section 423 of the Code, the terms of each Offering need not be identical provided that the terms of the Plan and the Offering together satisfy Sections 1.423-2(a)(2) and (a)(3) of such Treasury regulations. (r) “Offering Date” means the first day of each Offer Period. (s) “Option” means, with respect to each Offer Period, a right to purchase shares of Common Stock on the Exercise Date for such Offer Period in accordance with the terms and conditions of the Plan. (t) “Parent” means a “parent corporation” of the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code. (u) “Participant” means an Employee of the Company or Designated Parent or Subsidiary who has enrolled in the Plan as set forth in Section 5(a). (v) “Purchase Price” means an amount equal to 85% of the Fair Market Value of a share of Common Stock on the Exercise Date. (w) “Reserves” means, as of any date, the sum of: (1) the number of shares of Common Stock covered by each then outstanding Option under the Plan which has not yet been exercised; and (2) the number of shares of Common Stock which have been authorized for issuance under the Plan but not then subject to an outstanding Option. (x) “Subsidiary” means a “subsidiary corporation” of the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Eligibility. (a) General. Subject to the further limitations in Sections 3(b) and 3(c), any individual who is an Employee on a given Offering Date shall be eligible to participate in the Plan for the Offer Period commencing with such Offering Date. No individual who is not an Employee shall be eligible to participate in the Plan. (b) Limitations on Grant and Accrual. Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an Option under the Plan: (i) if, immediately after the grant, such Employee (taking into account stock owned by any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Parent or Subsidiary; or (ii) which permits the Employee’s rights to purchase stock under all employee stock purchase plans of the Company and its Parents or Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars (US$25,000) worth of stock (determined at the Fair Market Value of the shares at the time such Option is granted) for each calendar year in which such Option is outstanding at any time. The determination of the accrual of the right to purchase stock shall be made in accordance with Section 423(b)(8) of the Code and the regulations thereunder. (c) Other Limits on Eligibility. Notwithstanding Subsection (a), above, the Company, in its discretion, may determine prior to the Offering Date for an Offer Period that the following Employees shall not be eligible to participate in the Plan for such Offer Period: (i) Employees whose customary employment is 20 hours or fewer per week; (ii) Employees whose customary employment is for not more than five (5) months in any calendar year; (iii) Employees who have been employed for less than A-3 two (2) years; or (iv) highly compensated Employees (within the meaning of Section 414(q) of the Code). Notwithstanding Subsection (a), above, unless otherwise determined prior to the Offering Date for an Offer Period, the following Employees shall not be eligible to participate in the Plan for such Offer Period: Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether he or she is also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if his or her participation is prohibited under the laws of the applicable non-U.S. jurisdiction or if complying with the laws of the applicable non-U.S. jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. 4. Offer Periods. (a) Unless otherwise determined by the Administrator, the Plan shall be implemented through consecutive Offer Periods of six (6) months’ duration commencing each January 1 and July 1 following the Effective Date during the term of the Plan until the earlier of: (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased; or (ii) the Plan shall have been sooner terminated in accordance with Section 19. (b) A Participant shall be granted a separate Option for each Offer Period in which he or she participates. The Option shall be granted on the Offering Date and shall be automatically exercised on the last day of the Offer Period. (c) Except as specifically provided herein, the acquisition of Common Stock through participation in the Plan for any Offer Period shall neither limit nor require the acquisition of Common Stock by a Participant in any subsequent Offer Period. 5. Participation. (a) An eligible Employee may become a Participant in the Plan by submitting an authorization of payroll deduction (using such form or method (including electronic forms) as the Administrator may designate from time to time) as of a date in advance of the Offering Date for the Offer Period in which such participation will commence, as required by the Administrator for all eligible Employees with respect to a given Offer Period. (b) Payroll deductions for a Participant shall commence with the first partial or full payroll period beginning on the Offering Date and shall end on the last complete payroll period during the Offer Period, unless sooner terminated by the Participant as provided in Section 10. 6. Payroll Deductions. (a) At the time a Participant enrolls in the Plan, the Participant shall elect to have payroll deductions made during the Offer Period in amounts between one percent (1%) and not exceeding ten percent (10%) of the Compensation which the Participant receives during the Offer Period, subject to the limitation set forth in Section 3(b). (b) All payroll deductions made for a Participant shall be credited to the Participant’s account under the Plan and will be withheld in whole percentages only. A Participant may not make any additional payments into such account. (c) A Participant may discontinue participation in the Plan as provided in Section 10, or may increase or decrease the rate of payroll deductions during the Offer Period by submitting notice of a change of status (using such form or method (including electronic forms) as the Administrator may designate from time to time) authorizing an increase or decrease in the payroll deduction rate. Any increase or decrease in the rate of a Participant’s payroll deductions shall be effective as soon as administratively practicable following the date of the request. A Participant’s payroll deduction authorization (as modified by any change of status notice) shall remain in effect for successive Offer Periods unless terminated as provided in Section 10. The Administrator shall be authorized to limit the number of payroll deduction rate changes during any Offer Period. (d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant’s payroll deductions shall be decreased to 0%. Payroll A-4 deductions shall recommence at the rate provided in such Participant’s payroll deduction authorization, as amended, when permitted under Section 423(b)(8) of the Code and Section 3(b), unless such participation is sooner terminated by the Participant as provided in Section 10. 7. Grant of Option. On the Offering Date, each Participant shall be granted an Option to purchase (at the applicable Purchase Price) shares of Common Stock; provided: (i) that such Option shall be subject to the limitations set forth in Sections 3(b), 6 and 12 and (ii) that such Option shall be subject to such other terms and conditions (applied on a uniform and nondiscriminatory basis), as the Administrator shall determine from time to time. Exercise of the Option shall occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10, and the Option, to the extent not exercised, shall expire on the last day of the Offer Period with respect to which such Option was granted. Notwithstanding the foregoing, shares subject to the Option may only be purchased with accumulated payroll deductions credited to a Participant’s account in accordance with Section 6. In addition, to the extent an Option is not exercised on the Exercise Date, the Option shall lapse and thereafter cease to be exercisable. 8. Exercise of Option. Unless a Participant withdraws from the Plan as provided in Section 10, the Participant’s Option for the purchase of shares of Common Stock will be exercised automatically on the Exercise Date, by applying the accumulated payroll deductions in the Participant’s account to purchase the number of full shares subject to the Option by dividing such Participant’s payroll deductions accumulated prior to the Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price. No fractional shares will be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full share shall be returned to the Participant as soon as administratively practicable, without interest. In addition, any amount remaining in a Participant’s account following the purchase of shares on the Exercise Date due to the application of Section 423(b)(8) of the Code or Section 7, shall be returned to the Participant and shall not be carried over to the next Offer Period. During a Participant’s lifetime, a Participant’s Option to purchase shares hereunder is exercisable only by the Participant. 9. Delivery. After each Exercise Date on which a purchase of shares occurs, as soon as administratively practicable, the Company shall, in its discretion, either deliver to each Participant a certificate representing the shares of Common Stock purchased upon exercise of his or her Option, provide for the crediting of such shares in book entry form in the name of the Participant, or provide for an alternative arrangement for the delivery of such shares to a broker or recordkeeping service for the benefit of the Participant. In the event the Company is required to file a registration statement to issue any such certificate or otherwise deliver such shares, the Company will seek to obtain such authority. If the Company is unable to obtain from any such commission or agency authority which counsel for the Company deems necessary for the lawful issuance of any such certificate or other delivery of such shares, or if for any other reason the Corporation cannot issue or deliver shares of Common Stock and comply with Applicable Laws, the Corporation shall be relieved from liability to any Participant except that the Company shall return to each Participant to whom such shares cannot be issued or delivered the amount of the balance credited to his or her account that would have otherwise been used for the purchase of such shares. 10. Withdrawal; Termination of Employment. (a) A Participant may, by giving notice to the Company (using such form or method (including electronic forms) as the Administrator may designate from time to time), either: (i) withdraw all but not less than all the payroll deductions credited to the Participant’s account and not yet used to exercise the Participant’s Option under the Plan; or (ii) terminate future payroll deductions, but allow accumulated payroll deductions to be used to exercise the Participant’s Option under the Plan at any time. If the Participant elects withdrawal alternative (i) described above, all of the Participant’s payroll deductions credited to the Participant’s account will be paid to such Participant as soon as administratively practicable after receipt of notice of withdrawal, such Participant’s Option for the Offer Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offer Period. If the Participant elects withdrawal alternative (ii) described above, no further payroll deductions for the purchase of shares will be made during the Offer Period, all of the Participant’s payroll deductions credited to the Participant’s account will be applied to the exercise of the Participant’s Option on the Exercise Date (subject to Sections 3(b), 6, 7 and 12), and all remaining accumulated payroll deduction amounts shall be returned to the Participant. If a Participant withdraws A-5 from an Offer Period, payroll deductions will not resume at the beginning of the succeeding Offer Period unless the Participant enrolls in such succeeding Offer Period as provided in Section 10(b). The Administrator may, in its discretion and on a uniform and nondiscriminatory basis, specify procedures for withdrawal. (b) A Participant’s termination from Plan participation during the Offer Period precludes the Participant from again participating in this Plan during that Offer Period. However, such termination shall not have any effect upon his or her ability to participate in any succeeding Offer Period, provided that the applicable eligibility and participation requirements are again then met. A Participant’s termination from Plan participation shall be deemed to be a revocation of that Participant’s authorization of payroll deduction and such Participant must submit a new authorization of payroll deduction (using such form or method (including electronic forms) as the Administrator may designate from time to time) to resume Plan participation in any succeeding Offer Period. (c) Upon termination of a Participant’s employment relationship (as described in Section 2(l)) prior to the Exercise Date, the payroll deductions credited to such Participant’s account during the Offer Period will be returned to such Participant or, in the case of his/her death, to the person or persons entitled thereto under Section 14, and such Participant’s Option will be automatically terminated without exercise of any portion of such Option. (d) For purposes of this Plan, if a Designated Parent or Subsidiary ceases to be a Designated Parent or Subsidiary, each person employed by such Designated Parent or Subsidiary will be deemed to have terminated employment for purposes of this Plan and will no longer be an eligible Employee under the Plan, unless such person continues as an eligible Employee in respect of the Company or another Designated Parent or Subsidiary. 11. Interest. No interest shall accrue on the payroll deductions credited to a Participant’s account under the Plan. 12. Stock. (a) The maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be two million five hundred thousand shares (2,500,000) shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18. If the Administrator determines that on the Exercise Date for an Offer Period the number of shares with respect to which Options are to be exercised exceeds: (x) the number of shares then available for sale under the Plan; or (y) the number of shares available for sale under the Plan on the Offering Date for such Offer Period, the Administrator may disallow the purchase of any shares, and may make a pro rata allocation of the shares remaining available for purchase on such Offering Date or Exercise Date, as applicable, and shall either continue the Offer Period then in effect or terminate the Offer Period then in effect pursuant to Section 19, below. Such allocation method shall be “bottom up,” with the result that all Option exercises for one share shall be satisfied first, followed by all exercises for two shares, and so on, until all available shares have been exhausted. Any amount remaining in a Participant’s payroll account following such pro rata allocation shall be returned to the Participant and shall not be carried over to any Offer Period, as determined by the Administrator. (b) A Participant will have no interest in or voting right with respect to shares covered by the Participant’s Option until such shares are purchased on the Participant’s behalf on the exercise date in accordance with the applicable provisions of the Plan. No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase. (c) Shares to be delivered to a Participant under the Plan will be registered by the Company in the name of the Participant. 13. Administration. The Plan shall be administered by the Administrator, which shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility, to adjudicate all disputed claims filed under the Plan, and to designate separate Offerings for the eligible Employees of the Company and one or more Designated Parents or Subsidiaries, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions A-6 of the Plan will separately apply to each Offering. Every finding, decision and determination made by the Administrator shall, to the full extent permitted by Applicable Law, be final and binding upon all persons. Notwithstanding anything else contained in this Plan to the contrary, the Administrator may also adopt rules, procedures, separate offerings, or sub-plans applicable to particular Designated Parents or Subsidiaries or locations, which separate offerings or subplans may be designed to be outside the scope of Section 423 of the Code and need not comply with the otherwise applicable provisions of this Plan. The Administrator may delegate ministerial non-discretionary functions to third parties, including individuals who are officers or employees of the Company or Designated Parents or Subsidiaries. In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely on the advice of experts, including professional advisors to the Company. The Administrator will not be liable for any action, omission or decision under the Plan taken, made or omitted in good faith. 14. Designation of Beneficiary. (a) Each Participant will file a designation (using such form or method (including electronic forms) as the Administrator may designate from time to time) of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. (b) Such designation of beneficiary may be changed by the Participant at any time by written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Administrator), the Administrator shall deliver such shares and/or cash to the spouse (or domestic partner, as determined by the Administrator) of the Participant, or if no spouse (or domestic partner) is known to the Administrator, then to the issue of the Participant, such distribution to be made per stirpes (by right of representation), or if no issue are known to the Administrator, then to the heirs at law of the Participant determined in accordance with Section 27. 15. Transferability. No payroll deductions credited to a Participant’s account, Options granted hereunder, or any rights with regard to the exercise of an Option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 14) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Administrator may, in its sole discretion, treat such act as an election to withdraw funds from an Offer Period in accordance with Section 10. 16. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions or hold them exclusively for the benefit of Participants. All payroll deductions received or held by the Company may be subject to the claims of the Company’s general creditors. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. The Company shall retain at all times beneficial ownership of any investments which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Designated Parent or Subsidiary and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or a Designated Parent or Subsidiary. The Participants shall have no claim against the Company or any Designated Parent or Subsidiary for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan. 17. Reports. Individual accounts will be maintained for each Participant in the Plan. Statements of account will be given to Participants at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. A-7 18. Adjustments Upon Changes in Capitalization; Corporate Transactions. (a) Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, proportionally adjust the Reserves, the Purchase Price, the maximum number of shares that may be purchased in any Offer Period, as well as any other terms that the Administrator determines require adjustment, for: (i) any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock; (ii) any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; or (iii) any other transaction with respect to Common Stock, including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment, if any, shall be made by the Administrator and its determination shall be final, binding and conclusive. Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the Reserves and the Purchase Price. (b) Corporate Transactions. In the event of a proposed Corporate Transaction, each Option under the Plan shall be assumed by such successor corporation or a parent or subsidiary of such successor corporation, unless the Administrator, in the exercise of its sole discretion and in lieu of such assumption, determines to shorten the Offer Period then in progress by setting a new Exercise Date (the “New Exercise Date”). If the Administrator shortens the Offer Period then in progress in lieu of assumption in the event of a Corporate Transaction, the Administrator shall notify each Participant in writing at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that either: (i) the Participant’s Option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offer Period as provided in Section 10; or (ii) the Company shall pay to the Participant on the New Exercise Date an amount in cash, cash equivalents, or property as determined by the Administrator that is equal to the excess, if any, of (x) the Fair Market Value of the shares subject to the Option over (y) the Purchase Price due had the Participant’s Option been exercised automatically under Subsection (b)(i) above. In addition, all remaining accumulated payroll deduction amounts shall be returned to the Participant. (c) For purposes of Section 18(b), an Option granted under the Plan shall be deemed to be assumed if, in connection with the Corporate Transaction, the Option is replaced with a comparable Option with respect to shares of capital stock of the successor corporation or Parent thereof. The determination of Option comparability shall be made by the Administrator prior to the Corporate Transaction and its determination shall be final, binding and conclusive on all persons. (d) The Administrator may adopt such valuation methodologies for outstanding Options as it deems reasonable in the event of a cash or property settlement and, without limitation on other methodologies, may base such settlement solely upon the excess (if any) of the amount payable upon or in respect of such event over the Purchase Price of the Option. (e) In any of such events, the Administrator may take such action sufficiently prior to such event to the extent that the Administrator deems the action necessary to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is or will be available to stockholders generally. (f) Without limiting the generality of Section 13, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 18, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons. A-8 19. Amendment or Termination. (a) The Administrator may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18, no such termination can adversely affect Options previously granted, provided that the Plan or the Offer Period then in effect may be terminated by the Administrator by establishing a new Exercise Date for such Offer Period if the Administrator determines that the termination of the Plan or such Offer Period is in the best interests of the Company and its stockholders. Except as provided in Section 18 and this Section 19, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant without the consent of affected Participants. With respect to any amendment to increase the total number of shares of Common Stock under the Plan, the Administrator shall have discretion to disallow the purchase of any increased shares of Common Stock for the Offer Period in existence prior to such increase. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other Applicable Law), the Company shall obtain stockholder approval of any amendment in such a manner and to such a degree as required. (b) Without stockholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to limit the frequency and/or number of changes in the amount withheld during Offer Periods, determine the length of any future Offer Period and frequency of purchases within each Offer Period, determine whether future Offer Periods shall be consecutive or overlapping, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, establish or change Plan or per Participant limits on share purchases, designate from time to time the Parents and/or Subsidiaries whose employees may be eligible to participate in the Plan, change the service and other qualification requirements for eligible Employees under the Plan (subject to the requirements of Section 423(b) of the Code and applicable rules and regulations thereunder), establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable and which are consistent with the Plan, in each case to the extent consistent with the requirements of Code Section 423 and other Applicable Laws. 20. Notices. (a) All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Administrator at the location, or by the person, designated by the Administrator for the receipt thereof. (b) Any person who has acquired shares under this Plan shall give prompt written notice to the Company of any sale or other transfer of the shares if such sale or transfer occurs (a) within the two-year period after the Offering Date of the Offer Period with respect to which such shares were acquired, or (b) within the twelve-month period after the Exercise Date of the Offer Period with respect to which such shares were acquired. 21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant thereto shall comply with all Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option, the Company may require the Participant to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned Applicable Laws or is otherwise advisable. In addition, no Options shall be exercised or shares issued hereunder before the Plan has been approved by stockholders of the Company as provided in Section 23. 22. Term of Plan. The Plan shall become effective upon the Effective Date. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 19. A-9 23. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws and the applicable provisions of the Company’s charter and bylaws. 24. No Employment Rights. The Plan does not, directly or indirectly, create in any employee or class of employees any right with respect to continuation of employment by the Company or a Designated Parent or Subsidiary, and it shall not be deemed to interfere in any way with such employer’s right to terminate, or otherwise modify, an employee’s employment at any time. 25. No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or a Designated Parent or Subsidiary, participation in the Plan shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Designated Parent or Subsidiary, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended. 26. Effect of Plan. The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each Participant, including, without limitation, such Participant’s estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant. 27. Governing Law. The Plan is to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties, except to the extent the internal laws of the State of Delaware are superseded by the laws of the United States. Should any provision of the Plan be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable. 28. Dispute Resolution. The provisions of this Section 28 shall be the exclusive means of resolving disputes arising out of or relating to the Plan. The Company and the Participant, or their respective successors (the “parties”), shall attempt in good faith to resolve any disputes arising out of or relating to the Plan by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of a written statement of the party’s position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Plan shall be brought in the United States District Court for the Central District of California (or should such court lack jurisdiction to hear such action, suit or proceeding, in a California state court in Orange County) and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 28 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. A-10 CLEAN ENERGY FUELS CORP.4675 MACARTHUR COURT, SUITE
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